Data Science Predictive Analytics and Bi

Journal of Business Logistics
Vo lu m e 3 4, N u m b e r 2 , 2 0 1 3
Contents
Articles
Data Science, Predictive Analytics, and Big Data: A Revolution That Will Transform Supply
Chain Design and Management
Matthew A. Waller and Stanley E. Fawcett
77
A Compendium of Multi-Item Scales Utilized in Logistics Research (200110): Progress

Achieved Since Publication of the 19732000 Compendium
Scott B. Keller, Kimberly Hochard, Thomas Rudolph, and Meaghan Boden
85
A Multidisciplinary Approach to Supply Chain Agility: Conceptualization and

Scale Development
David M. Gligor, Mary C. Holcomb, and Theodore P. Stank
94
Measurement and Moderation: Finding the Boundary Conditions in Logistics and Supply
Chain Research
Thomas J. Goldsby, A. Michael Knemeyer, Jason W. Miller, and Carl Marcus Wallenburg
jbl_v34_i2_contents.indd 1
109
Conceptualizations of Trust: Can We Trust Them?

Judith M. Whipple, Stanley E. Griffis, and Patricia J. Daugherty
117
Environmental Development of Emerging Economy Suppliers: Antecedents and Outcomes

Matthias Ehrgott, Felix Reimann, Lutz Kaufmann, and Craig R. Carter
131
Managing the Innovation Adoption of Supply Chain FinanceEmpirical Evidence From Six
European Case Studies
David A. Wuttke, Constantin Blome, Kai Foerstl, and Michael Henke
148
Where Do We Go From Here? Progressing Sustainability Implementation Efforts Across

Supply Chains
Sebastian Brockhaus, Wolfgang Kersten, and A. Michael Knemeyer
167
6/3/2013 12:00:02 PM
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5/23/2013 7:49:09 AM
Journal of Business Logistics, 2013, 34(2): 7784

Council of Supply Chain Management Professionals
Data Science, Predictive Analytics, and Big Data: A Revolution

That Will Transform Supply Chain Design and Management
Matthew A. Waller1 and Stanley E. Fawcett2
1
2
University of Arkansas
Weber State University
e illuminate the myriad of opportunities for research where supply chain management (SCM) intersects with data science, predictive analytics, and big data, collectively referred to as DPB. We show that these terms are not only becoming popular but are also relevant to
supply chain research and education. Data science requires both domain knowledge and a broad set of quantitative skills, but there is a dearth
of literature on the topic and many questions. We call for research on skills that are needed by SCM data scientists and discuss how such skills
and domain knowledge affect the effectiveness of an SCM data scientist. Such knowledge is crucial to develop future supply chain leaders. We
propose denitions of data science and predictive analytics as applied to SCM. We examine possible applications of DPB in practice and provide examples of research questions from these applications, as well as examples of research questions employing DPB that stem from management theories. Finally, we propose specic steps interested researchers can take to respond to our call for research on the intersection of SCM
and DPB.
Keywords: data science; predictive analytics; big data; logistics; supply chain management; design; collaboration; integration; education
INTRODUCTION
Big data is the buzzword of the day. However, more than the
typical faddish fuzz, big data carries with it the opportunity to
change business model design and day-to-day decision making
that accompany emerging data analysis. This growing combination of resources, tools, and applications has deep implications in
the eld of supply chain management (SCM), presenting a doozy
of an opportunity and a challenge to our eld. Indeed, more data
have been recorded in the past two years than in all of previous
human history.1 Big data are being used to transform medical
practice, modernize public policy, and inform business decision
making (Mayer-Schonberger and Cukier 2013). Big data have
the potential to revolutionize supply chain dynamics.
The growth in the quantity and diversity of data has led to
data sets larger than is manageable by the conventional, handson management tools. To manage these new and potentially
invaluable data sets, new methods of data science and new applications in the form of predictive analytics, have been developed.
We will refer to this new conuence of data science, predictive
analytics, and big data as DPB.
Data are widely considered to be a driver of better decision
making and improved protability, and this perception has some
data to back it up. Based on their large-scale study, McAfee and
Brynjolfsson (2012) note, [t]he more companies characterized
themselves as data-driven, the better they performed on objective
measures of nancial and operational results companies in the
Corresponding author:
Matthew A. Waller, Sam M. Walton College of Business, WCOB
308, University of Arkansas, Fayetteville, AR 72701-1201, USA;
E-mail: MWaller@walton.uark.edu
1
Source: IBM, http://www-01.ibm.com/software/data/bigdata/

accessed March 27, 2013.
top third of their industry in the use of data-driven decision making were on average, 5% more productive and 6% more protable than their competitors (p. 64). To make the most of the
big-data revolution, supply chain researchers and managers need
to understand and embrace DPBs role and implications for supply chain decision making.
DATA SCIENCE, PREDICTIVE ANALYTICS, AND BIG
DATA
There is growing popular, business, and academic attention to
DPB. For instance, the October 2012 issue of Harvard Business
Review contained three articles that are relevant to this editorial:
Big Data: The Management Revolution (McAfee and Brynjolfsson 2012), Data Scientist: The Sexiest Job of the 21st
Century (Davenport and Patil 2012), and Making Advanced
Analytics Work for You (Barton and Court 2012). MIS Quarterly had a special issue on business intelligence and the lead
article was titled, Business Intelligence and Analytics: From Big
Data to Big Impact (Chen et al. 2012). There is also a plethora
of articles in trade and even lay publications on these topics.
There is even a new journal, Big Data, which premiered in
March 2013.
Over the past few years, we have been trying to understand
the DPBs implications for research and education in business
logistics and SCM. We believe that these new tools will transform the way supply chain are designed and managed, presenting
a new and signicant challenge to logistics and SCM. Meeting
this challenge may require changes in foci of research and education. Many traditional approaches will need to be re-imagined.
Some standard practices may even be discarded as obsolete in
the new data-rich environment. Some may see the possibilities as
threats rather than opportunities. Yet DPB and SCM are fundamentally compatible, thus the tremendous value of DPB lies
within our grasp.
78
M. A. Waller and S. E. Fawcett
Figure 1: Effectiveness, domain knowledge, and breadth of analytical skill set.

Broad Set of
Analy cal Skills
E ec veness of
Data Scien st
We want to encourage submission of research on topics

related to DPB that is relevant to logistics and SCM. Importantly, because there is a lack of agreement regarding the meanings of these terms, and because there is a dearth of articles on
how these terms apply to the logistics and supply chain disciplines, we would like to facilitate the process by suggesting denitions, concepts, and avenues for research.
Data science: Powerful tools made relevant by domain
knowledge
Narrow Set of
Analy cal Skills
Domain Knowledge
Generally, data science is the application of quantitative and

qualitative methods to solve relevant problems and predict outcomes. One of the salient revelations of today, with the vast and
growing amount of data, is that domain knowledge and analysis
cannot be separated. This is another motivation to write this editorial. Research in the area of DPB is needed by researchers with
domain knowledge in logistics and SCM. Professor Jeff Stanton
of Syracuse University was quoted by Dumbill et al. (2013):
From a teaching perspective, as a faculty member I can
teach someone how to do a t-test in 10 min, and I can
teach them how to write a Python program in half an
hour, but what I cannot teach them very easily is the
domain knowledge. In other words, in a given area, if you
are from healthcare, what you need to know in order to
be effective at analysis is very different than if you are in
retail. That underlying domain knowledge, to be able to
have a student come up to speed on that is very hard. (p.
22)
Likewise, Shelly Farnham of Microsoft was quoted by Dumbill et al. (2013):
One of the challenges is that data science is not agnostic
of domain. For example, when we are looking for people,
interns or full-time people on our team, we denitely look
for people who have experience analyzing data, but they
also should be deeply engaged with the topic I think
that the domain knowledge is a very important aspect of
what we are looking for. (p. 25)
Thus, academic and applied professionals must have both the
analytical skills and the business and management understanding.
As Provost and Fawcett (2013) write, But data science involves
much more than just data-mining algorithms. Successful data scientists must be able to view business problems from a data perspective (p. 52).
Data scientists need deep domain knowledge and a broad set
of analytical skills. Developing a broad set of analytical skills
requires consistent investments of time. Developing deep domain
knowledge requires similar dedication of effort. To that end, typically there is no single individual that can possibly have all of
what is needed by a data scientist. If you have someone with lots
of domain experience but limited analytical capabilities, it may
be difcult to acquire the analytical capabilities. On the other
hand, someone with strong analytical capabilities may not be
willing to learn the domain or may never have the opportunity to
learn the domain. Perhaps, developing analytical capabilities may
be easier at a younger age, whereas learning the intricacies of a

domain may depend on accumulated experience, which emerges
from motivation and well-invested time.
Although we do not have a strong body of evidence, our conjecture is that domain knowledge is necessary for data science
but that the returns on domain knowledge are diminishing and
that the relationship is moderated by the breadth of the analytical
skills. Figure 1 illustrates the conceptual relationship between
effectiveness, domain knowledge, and breadth of analytical skill
set. The effectiveness of a data scientist might be measured by
the size of the actionable opportunities they discover.
However, some analytical skills are more important than others. Table 1 provides examples of skills that are needed by a
data scientist in SCM. What is interesting is that education in
most of these disciplines progresses toward more focus and less
breadth. This is not only true of the quantitative disciplines, but
it is also true of the functional business disciplines. Training a
data scientist would require a functional business discipline to
inculcate toward more breadth, rather than more depth, as a student progresses in his/her educational path. This would be true
for the training of both the practitioner and the researcher. Perhaps there should be two paths for Master and PhD degrees in
SCM, one for domain knowledge creation and dissemination and
one for SCM data science.2
You will probably notice the applied nature of the skills
needed by an SCM data scientist in Table 1. However, this does
not mean that a strong theoretical education is not needed in
SCM. In fact, a strong theoretical knowledge is crucial, within
the area of SCM. That is, an SCM data scientist needs a strong
theoretical background in SCM along with an ability to apply
analysis techniques from a broad variety of quantitative disciplines as well as business disciplines. You will notice that the
rst six disciplines in Table 1 are quantitative disciplines and the
next four are business disciplines. Because data science is
applied, tools are needed for application. It is notable that SCM
is missing from the list. It is missing from the list because the
SCM data scientist must understand both the theory and application of SCM. This is the domain, and the other disciplines are
used for application of data to the SCM domain.
2
It is tempting to think that this is the difference between marketing and marketing science, however, most PhDs in marketing
science tend to have a very strong focus on one methodological
area.
Data Science & Big Data
79
Table 1: Examples of skills needed by a supply chain management (SCM) data scientist
SCM data scientist skill set
Discipline
More important
Less important
Statistics
Broad awareness of many different methods

of estimation and sampling
Understanding application of qualitative and
quantitative methods of forecasting
Numerical methods of optimization
Quick design and implementation of discrete
event simulation models
Using probability theory with actual data to
estimate the expected value of random variables of interest
Using numerical methods to estimate functions
relating independent variables to dependent variables
Capital budgeting
Determining opportunity cost
Marketing science
Managerial accounting
Derivations of methods and proofs

of maximum likelihood estimation
Understanding of underlying stochastic
processes
Finding global optimal solutions
Queuing theory
Forecasting
Optimization
Discrete event
simulation
Applied probability
Analytical mathematical
modeling
Finance
Economics
Marketing
Accounting
We now propose a denition of SCM data science: SCM data

science is the application of quantitative and qualitative methods
from a variety of disciplines in combination with SCM theory to
solve relevant SCM problems and predict outcomes, taking into
account data quality and availability issues. We welcome
research on this topic and would be pleased to publish it in the
Journal of Business Logistics. Practitioners are looking for
answers, and as researchers we should be proposing solutions,
frameworks, and answers, all based on theoretically grounded
research. We need theoretically based research to verify or reject
the ideas in Table 1 and to expand them. At this point, Table 1
is simply conjecture. We invite research that would address
which skill sets are needed by SCM data scientists.
Some may object to our claim that SCM theory is needed by
the SCM data scientist. However, theory is particularly important
now that data and data variety are proliferating. Theory is particularly important for preventing false positives.3 False positives
emerge when relationships between variables are discovered that
do not really exist. The problem is that as the number of variables increasesthat is, as the use of a theoretical data mining
proliferatesthe chances of false positives increases exponentially. In Figure 2, the horizontal axis is the number of variables
and the vertical axis is the number of false positives when the
probability of a given false positive is 0.01. Theory can help the
research or manager avoid spurious decision making as they
avoid falling prey to apparent relationships that do not really
exist. As Barton and Court (2012) observe, We have found that
hypothesis-led modeling generates faster outcomes and also
roots models in practical data relationships that are more broadly
understood by managers (p. 81).
Big data, which will be discussed below, is the source of the
explosion of new variables that can be investigated, and therefore
3
For a very interesting discussion on this topic, see Carraway

(2012).
The theory of stochastic processes

Proving theorems
Efcient market theory
Macroeconomic theory
Semiotics
Debits and credits journal entries
the reason why we expect the number of false positives to grow

exponentially. Using the appropriate logic and/or theory to build
models prior to running predictive analytics is a key approach to
mitigating the problems associated with false positives. So,
again, although SCM data science is applied, it must be based
on theory to guard against a proliferation of false positives,
which result in wasted time and money. Again, Barton and Court
(2012) comment that a pure data mining approach often leads
to an endless search for what the data really say (p. 81).
Predictive analytics
Predictive analytics is a subset of data science. Recognition of
the uniqueness of predictive analytics illuminates some
interesting needs in research as is illustrated by Table 2.
Figure 2: Relationship between number of variables and number of false positives when the probability of a given false positive is 0.01.
80
Table 2: Examples of research in predictive analytics

Predictive analytics research (examples)
Comparative
discipline
Dimension
of interest
Statistics
Quantitative
Forecasting
Predicting the future
Optimization
Minimization and
maximization
Discrete event
simulation
Quantitative analysis
of a system in a
stochastic setting
Description of
stochastic variables,
expected values,
and uncertainty
Search for patterns
and relationships
between a large
number of variables
with lots of data
Precise analysis using
articial and unrealistic
assumptions for
theorems and proofs
Applied probability
Data mining
Analytical
mathematical
modeling
Relevant
Less relevant
Integrating quantitative and

qualitative analysis
Using forecasting techniques
for evaluating what
would have happened under
different circumstances
Assessment of the quality of
the optimal solution and
the ability to implement it
versus near optimal solutions
Discrete event simulation in a
business process reengineering setting
Improving Lagrange Multiplier

tests for autocorrelation
Deriving generalized estimators
of seasonal factors
Applied probability along with

application anchoring and
framing affects from psychology
Asymptotic properties of
Gaussian processes
Data mining preceded by logical

and theoretical descriptions
of possible relationships and patterns
Gibbs posterior for variable

selection in data mining
Methods of quickly and

inexpensively modeling approximate
relationships between variables
while still using deductive
mathematical methods
Proving inventory theorems that

assume known, continuous demand
with perfect information
Table 2 examines a sample of disciplines related to predictive

analytics, selects a dimension of that discipline, and compares
possible research topics and provides an example of a research
area that would be more relevant to predictive analytics and an
example of a research area that would be less relevant. Table 2
indirectly points to the distinction between predictive analytics
and each of these quantitative disciplines. It also provides
researchers with possible avenues of research that would be in
the realm of predictive analytics.
Importantly, although predictive analytics is related to many
long-standing quantitative approaches, it stands as distinct from
each. Statistics is quantitative, whereas predictive analytics is
both quantitative and qualitative. Forecasting is about predicting
the future, and predictive analytics adds questions regarding what
would have happened in the past, given different conditions.
Optimization is about nding the minimum or maximum of a
function, subject to constraints, whereas predictive analytics also
concerns what would characterize a system that was not operating optimally. Analytical modeling is primarily about generating
mathematical axioms and then proving lemmas and theorems,
whereas predictive analytics attempts to quickly and inexpensively approximate relationships between variables while still
using deductive mathematical methods to draw conclusions.
Use of polyhedral functions

in linear programming
Random number generation
for discrete event simulation
These are some examples of the differences in emphasis between

predictive analytics and well known quantitative disciplines.
The topics in Table 2 have been examined in part, but additional research in these relevant areas would advance predictive
analytics ability to rene and improve supply chain decision
making. Indeed, the Journal of Business Logistics is interested in
predictive analytics research that is relevant to logistics and
SCM. To that end, we propose denitions of logistics and supply
chain predictive analytics:
Logistics predictive analytics use both quantitative and
qualitative methods to estimate the past and future behavior of the ow and storage of inventory, as well as the
associated costs and service levels.
SCM predictive analytics use both quantitative and qualitative methods to improve supply chain design and competitiveness by estimating past and future levels of
integration of business processes among functions or companies, as well as the associated costs and service levels.
What is dened here as logistics predictive analytics and SCM
predictive analytics has already existed in the past, it just lacked a
81
Table 3: Examples of causes of big data

Type of data
Sales
Consumer
Inventory
Location and time
Volume
Velocity
More detail around the sale,

including price, quantity,
items sold, time of day, date,
and customer data
More detail regarding decision and
purchasing behavior, including items
browsed and bought, frequency,
dollar value, and timing
From monthly and weekly

to daily and hourly
Direct sales, sales of distributors,

Internet sales, international sales,
and competitor sales
From click through

to card usage
Perpetual inventory at more locations,

at a more disaggregate level
(e.g., style/color/size)
Sensor data to detect location in store,
including misplaced inventory,
in distribution center
(picking, racks, staging, etc.),
in transportation unit
From monthly updates

to hourly updates
Face proling data for shopper

identication and emotion detection;
eye-tracking data; customer
sentiment about products purchased
based on Likes, Tweets, and
product reviews
Inventory in warehouses, stores,
Internet stores, and a wide variety
of vendors online
Not only where it is, but what is
close to it, who moved it, its path
to get there, and its predicted path
forward; location positions that are
time stamped from mobile devices
name. The idea is becoming so common that a name helps with

communication about the concept. Reading Table 2 with these definitions in mind should provide a guide to appropriate research on
logistics or SCM predictive analytics that would be of particular
interest at the Journal of Business Logistics. Barton and Court
(2012) highlight the growing value of advanced analytics:
Advanced analytics is likely to become a decisive competitive asset in many industries and a core element in companies efforts to improve performance. Its a mistake to
assume that acquiring the right kind of big data is all that
matters. Also essential is developing analytics tools that
focus on business outcomes . (p. 81)
Big data
Big data is unique because of the volume, variety, and velocity
of the data, which today is widely available and much less
expensive to access and store (McAfee and Brynjolfsson 2012).
Volume can occur in many ways. There are more data because,
among other reasons, the data are captured in more detail. For
instance, instead of just recording that a unit sold at a particular
location, the time it was sold and the amount of inventory at the
time of the sale, is also captured. As another example, many
companies that did not record daily sales by location and by
stock-keeping unit to make inventory decisions, now do. Moreover, long global supply chains necessitate data capture at multiple points in the supply chain. In addition, there is now a
proliferation of consumer sentiment data resulting from Tweets,
Likes, and product reviews on websites. Such data must be analyzed and quantied. Software companies that provide algorithms
designed to assess text from reviews and Tweets are cropping up
Frequent updates for new

location and movement
Variety
in large numbers. Table 3 provides examples of some of the

causes of big data.
Table 4 provides examples of potential applications of big
data within logistics and SCM practice. Each column of Table 4
represents a key managerial component of business logistics and
each row represents a different category of user of logistics. This
is not intended to be an exhaustive list of components of logistics nor of users of logistics.
Table 5 provides examples of research questions based upon
management areas within logistics and SCM with reference to
various sources of big data.
Back to basics
Finally, using management theory as a lens, we provide a few
examples of research questions that are relevant to SCM in Table
6.
Demand for DPB professionals
We believe that there is increasing demand for professionals with
competencies in DPB. As an example of overall interest, we show
gures of the increasing numbers of Google searches for these
terms. Figure 3 show a graph of numbers of Google searches4
since 2004 for various relevant terms. The scales on the y-axes
are relative with 100 representing the peak number of searches.
As shown in Figure 3A, there were virtually no searches for
Data Science until 2005 and none for Data Scientist until
2011. We believe the terms are catching on because of the
4
http://www.google.com/trends/explore#q=%22data%20science
%22%2C%20%22data%20scientist%22&cmpt=q (referenced March
22, 2013).
82
Table 4: Examples of potential applications of big data in logistics
User
Inventory
management
Forecasting
Transportation
management
Human
resources
Carrier
Time of delivery,
factoring in weather,
driver characteristics,
time of day and date
Real time capacity

availability
Optimal routing,
taking into account
weather, trafc congestion,
and driver characteristics
Manufacturer
Early response
to extremely negative
or positive customer
sentiment
Reduction in shrink,
efcient consumer
response, quick response,
and vendor managed
inventory
Improved notication of
delivery time, and
availability; surveillance data
for improved yard management
Retailer
Customer sentiment
data and use of
mobile devices in stores
Improvement in
perpetual inventory
system accuracy
Linking local trafc

congestion and weather
to store trafc
Reduction in
driver turnover,
driver assignment,
using sentiment
data analysis
More effective
monitoring of
productivity;
medical sensors
for safety of labor
in factories
Reduction in labor
due to reduction in
misplaced inventory
Table 5: Examples of research questions
Type of data
Sales
Consumer
Location and time
Inventory
management
Transportation
management
How can sales data

be used with detailed
customer data to
improve inventory
management either
in terms of forecasting
or treating some inventory
as committed based
on specic shoppers requirements?
How can face proling
data for shopper identication,
emotion detection, and eye-tracking
data be used to determine
which items to carry
and stock at particular
shelf locations?
How can sensor data
used to detect location
in store, be used to
improve inventory management,
including departmental
merchandising decisions?
How can more current

sales data be used to
re-direct shipments in
transit? How can sales
data, integrated with
detailed customer data,
be used for more
efcient and effective
merge-in-transit operations?
How can delivery
preferences captured in
online purchases
be used to manage
transportation mode
and carrier selection decisions?
How can more granular sales "

data from the wide variety
of sources that exist be
used to improve visibility
on the one hand and
trust on the other,
between trading partners?
How can sensor data

in the distribution
center be used to
anticipate transportation
requirements?
How can location and time-stamp

data of shoppers be used for
collaborative assortment and
merchandising decisions?
increased need for people with skill sets that can deal with big
data. Figure 3B shows a graph of searches5 for Predictive Analytics. Like Data Science, searches for Predictive Analytics
essentially began in 2005 with signicant growth after 2009. Fig5
http://www.google.com/trends/explore#q=%22predictive%
20analytics%22&cmpt=q (referenced March 22, 2013).
Customer and supplier

relationship management
How can customer sentiment

about products purchased
based on Likes,
Tweets, and product reviews
be used to collaborate on forecasts?
ure 3C shows a graph of searches6 for Big Data, with Supply

Chain Management as a reference. As you can see, this is the
rst year Big Data had more searches than Supply Chain
6
http://www.google.com/trends/explore#q=%22big%20data%
22%2C%20%22supply%20chain%20management%22&cmpt=q
(referenced March 22, 2013).
83
Table 6: Examples of big data research questions that are relevant to supply chain management (SCM), stemming from management
theory
Theory
Research question
Transaction
How does the existence of big data affect the reduction in internal transaction costs vis-"a-vis external
cost economics
transaction costs and how is this affecting the size of logistics organizations and the structure of supply chains?
Resource-based view Can SCM data science be developed as a resource that is valuable, rare, in imitable, and nonsubstitutable?
Contingency theory How can big data and SCM data science be used by logistics managers to meet internal needs and adjust to
changes in the supply chain environment?
Resource
How does the ability to use big data for SCM decisions affect a rms power in comparison with its suppliers
dependence theory
or customers?
Agency theory
How does the proliferation of big data affect the agency costs associated with the use of third party logistics?
Institutional theory
How do differences in freedom of information between countries affect rms operating under these different
institutions in terms of their abilities to leverage big data in the supply chain?
Figure 3: Google searches for growth of interest in DPB professionals.

Panel A: Google Searches for Data Science and Data Scien st since 2004
Panel B: Google Searches for Predic ve Analy cs since 2004
Panel C: Google Searches for Big Data and Supply Chain Management since 2004
Management. We do not think big data will become more

important than SCM; it is shown here just to illustrate how
popular the phrase is becoming.
Clearly, Figure 3 shows that interest in DPB is growing

exponentially. We believe that the phenomena underlying this
trend create a number of challenges and opportunities for our
84
discipline. We have only begun to explore the possibilities, and

we need to more creatively ask informed decisions about how
big data can improve supply chain design, relationship development, improve customer service systems, and manage day-to-day
value-added operations.
pline in a way that is both rigorous and relevant. Indeed, we

believe it is a real doozy for knowledge creation and dissemination in SCM.
ACKNOWLEDGMENTS
CONCLUDING DISCUSSION
Although Big data has become a contemporary buzzword, it has
signicant implications in our discipline, and presents an opportunity and a challenge to our approach of research and teaching. We
can easily see how data science and predictive analytics apply to
SCM, but sometimes nd it more difcult to see the direct connection of big data to SCM. Therefore, we would like to see research
published in the Journal of Business Logistics that brings clarity to
the relevance of big data, and DPB in general within the supply
chain domain. Here is how you can participate:
1.
2.
3.
4.
5.
Submit manuscripts dealing with DPB.

Submit Forward Thinking articles on DPB.
Send us a proposal for a Special Topics Forum on DPB.
Design a Thought Leader Series on DPB.
Start a new research project on DPB, using your existing
research skills and domain knowledge.
6. If you have ideas about how we can promote research on
DPB outside of these categories, please email us and let us
know your thoughts.
This edition of the Journal of Business Logistics, Volume
34, Issue 2, represents the mid-point of our ve-year commitment as co-editors-in-chief. We have been diligent in this commitment to serve not only as stewards and administrators of
the journal but also to span boundaries to provide leadership
and direction for research in our discipline. We believe the
intersections of our discipline with data science, predictive analytics, and big data will create signicant challenges for educating future supply chain leaders. Yet, they also provide
opportunities for research to advance knowledge in our disci-
We thank the following individuals for their helpful comments,

edits, and input on earlier drafts of this manuscript: Yao (Henry)
Jin, John Saldana, Travis Tokar, Christopher Vincent, Xiang
Wan, and Brent Williams. Their input resulted in a signicant
improvement to the manuscript.
REFERENCES
Barton, D., and Court, D. 2012. Making Advanced Analytics
Work for You. Harvard Business Review 90:7983.
Carraway, R. 2012. Big Data, Small Bets. Forbes. http://www.
forbes.com/sites/darden/2012/12/13/big-data-small-bets/.
Chen, H., Chiang, R., and Storey, V. 2012. Business
Intelligence and Analytics: From Big Data to Big Impact.
MIS Quarterly 36(4):116588.
Davenport, T., and Patil, D. 2012. Data Scientist: The Sexiest
Job of the 21st Century. Harvard Business Review 90:7076.
Dumbill, E., Liddy, E., Stanton, J., Mueller, K., and Farnham, S.
2013. Educating the Next Generation of Data Scientists.
Big Data 1(1):2127.
Mayer-Sch
onberger, V., and Cukier, K. 2013. Big Data: A
Revolution That Will Transform How We Live, Work, and
Think. New York: Houghton Mifin Harcourt Publishing
Company.
McAfee, A., and Brynjolfsson, E. 2012. Big Data: The
Management Revolution. Harvard Business Review 90:60
68.
Provost, F., and Fawcett, T. 2013. Data Science and Its
Relationship to Big Data and Data-Driven Decision Making.
Big Data 1(1):5159.

A Compendium of Multi-Item Scales Utilized in Logistics Research

(200110): Progress Achieved Since Publication of the 19732000
Compendium
Scott B. Keller, Kimberly Hochard, Thomas Rudolph, and Meaghan Boden
University of West Florida
orty years have passed since the rst multi-item measurement scales were employed through survey research to better understand important
logistics concepts. Through the years, four leading logistics journals have published research containing a total of 1,670 scales within 283
articles. A 42% increase in utilization has occurred during the most recent decade. The research fully discloses the conceptualization, composition, and properties of the multi-item survey scales utilized in the study of logistics and supply chain management theory and practice. By documenting each scale published from 2001 to 2010, the authors make comparisons with results from the 19732000 study. Primary ndings
indicate an increase in the percentage of research utilizing multi-item scales, and an increase in the application of conrmatory factor analysis
(CFA) has assisted in producing more highly acceptable psychometric properties of the scales. This implies that researchers are utilizing more
highly developed scales and following strict scale-development procedures for building more robust scales to measure concepts important for
advancing our knowledge of logistics and supply chain management. The top four conceptual categories for the scales have remained the same
since 1973 and account for greater than half of the scales published. Eight additions to the categories since 2001 pertain greatly to controlling
our supply chains for customer, brand, and overall security benets. The compendium of scales provides a central document to reference as
researchers seek to employ highly developed survey measures.
Keywords: survey; measurement; scales; logistics; metrics; reliability; supply chain management
Transportation Journal was one of the rst journals to publish

logistics research beginning in 1961, but it was not until 1973
when the rst article employing multi-item scales in leading
logistics journals appeared in the International Journal of Physical Distribution which is now the International Journal of Physical Distribution and Logistics Management (DeHayes 1973).
Ever since DeHayes (1973) utilized such measurement scales to
study railroad on-time performance, researchers of transportation,
logistics, and supply chain management have steadily increased
the development and reliance on multi-item scales for their
research.
Multi-item scales are utilized in survey research to measure
concepts that are not easily quantiable with a single item on a
questionnaire (Dunn et al. 1994; Mentzer and Kahn 1995; Mentzer and Flint 1997). Well-conceptualized latent variables (i.e.,
constructs) supported by highly developed and rened measurement scales allow researchers the certainty needed for exploring
and conrming business concepts and relationships among variables for theory development. Construct measurement and
hypothesis testing are inuenced by the level of validity and reliability of multi-item scale survey data. Scholarship and disciplines advance, in part, as the tools utilized by researchers help
assure that what is measured is what was intended to be measured.
Nearly four decades have passed since publication of the rst
multi-item scale utilized in a leading logistics-focused journal.
Keller et al. (2002) documented, categorized, and evaluated the
development and utilization of multi-item scales in logistics

research starting with DeHayes (1973) through the year 2000.
Results from the study indicate a signicant growth in the number of articles employing multi-item scales and the number of
scales developed and utilized to better comprehend logistics concepts and relationships. The research also established that the
scales used to measure logistics concepts have, over time,
improved in the range of items per scale and in the average
strength in coefcient alpha reported.
As an extension of Keller et al. (2002), the current study sets
forth to document the 10-year progress made from 2001 to 2010.
More specically, the core objectives of the research include:
Scott Keller, Professor, Logistics and Marketing, University of West
Florida, 11000 University Parkway, Pensacola, FL 32514-5750,
USA; E-mail: skeller@uwf.edu
The research followed the method for identifying and categorizing the scales that was employed by Keller et al. (2002) and
will be discussed in the next section. Results and observations
then will be discussed to disclose scale characteristics and the
1. To identify and document in a compendium, the multi-item

scales published in leading logistics journals from 2001 to
2010. This will offer broad-scale categorizations for researchers to more easily reference existing scales and related articles
for future research.
2. To offer a descriptive comparison of scale categories with the
results from Keller et al. (2002).
3. To document and compare with the results from Keller et al.
(2002), the scale development techniques utilized to assess
measurement validity and reliability.
4. To offer a descriptive comparison of the research results
between the Journal of Business Logistics and the Journal of
Marketing.
5. To identify opportunities for the future development of scales
utilized in logistics survey research.
86
primary tools of evaluating the utility of the scales. Implications

will be discussed with the goal to provide researchers directions
for the use of existing scales and for the development of future
scales important for advancing logistics as a discipline. Appendix
S1 contains each multi-item scale, its psychometric characteristics, and the authors who utilized the scale in the leading logistics journal publications from 2001 through 2010.
SCALE IDENTIFICATION AND CATEGORIZATION
PROCESS
Multi-item scales documented in the compendium (Appendix
S1) were obtained from research published in the International
Journal of Logistics Management (IJLM), International Journal
of Physical Distribution and Logistics Management (IJPDLM),
the Journal of Business Logistics (JBL), and Transportation
Journal (TJ). Keller et al. (2002) utilized the four journals
because they are known to be the leading journals publishing
logistics research (see, e.g., Fawcett et al. 1995; Carter 2002;
Gibson and Hanna 2003; Autry and Grifs 2005; Zsidisin et al.
2007; Menachof et al. 2009; Gorman and Kanet 2011; LiaoTroth et al. 2012). Our research also reports on the survey
scales published in these four journals because of the consistent
rankings of the journals publishing logistics research and
because our research objectives set forth to draw comparisons
from the three decades evaluated by Keller et al. (2002) to the
most recent decade of 200110.
Doctoral students utilizing survey research are instructed in
the proper design and evaluation of scales utilized to measure
latent constructs. Multiple survey questions are employed to
attain a more robust measurement of a concept over that
achieved by a single item on a questionnaire. Researchers may
evaluate such robustness through validity and reliability analysis
(Dunn et al. 1994; Mentzer and Flint 1997). By following rigorous scale development procedures to achieve highly valid and
reliable measures, researchers are better equipped to employ the
measures for theory testing and development.
Appendix S1 contains a categorical listing of multi-item scales
and the available information concerning the scales validity and
reliability that have been published in leading logistics journals.
This was the primary intent of the research, so that, researchers
studying logistics and supply chain management theory and concepts may have a central document with which to access scales
previously developed and tested. While the authors have done
their very best to identify and properly document each scale and
its accompanying support for its psychometric properties, it is
possible with such a large undertaking to have made an occasional error. If such an error exists, it is completely unintentional
and the authors offer apologies in advance.
The four journals, IJLM, IJPDLM, JBL, and TJ, were independently reviewed by four authors to provide a systematic collection of the scales from each volume and issue. It is important to
note that a specic requirement was that the scale be utilized in
the research; however, it did not have to be originally developed
by the authors utilizing it. Scales were required to have at least
two items reported, and the researchers must have indicated that
some minimal procedures were taken to establish the usefulness
of the scale. This could be accomplished, for example, through
S. B. Keller et al.
an indication that a preliminary test was conducted with a target

sample to assess the wording of the questions comprising the
scale.
The procedure followed included the following:
1. Researchers obtained copies of all articles appearing in the
four journals from 2001 to 2010.
2. Four researchers independently reviewed each article in each
issue to identify articles employing multi-item scales.
3. The researchers compared their ndings and any discrepancies
were discussed among the researchers to ensure that all
scale articles were properly identied.
4. Statistics pertaining to scale validity and reliability that were
reported were documented.
5. A Delphi technique was utilized by the authors to offer general categorization of the scales.
RESULTS AND DISCUSSION
Information and data pertaining to the scales appears in Appendix S1. An alphabetical listing of the categories used to organize
the scales into broad descriptions appears at the start of Appendix S1. Scales appear by: Alphabetized category and then alphabetized construct/scale name given by the author(s). Primary
information pertaining to the scale, if provided by the author(s),
includes author name(s) and year of publication, description/denition of the construct, description of the sample utilized, and
any reference that may have indicated that the scale was derived
from another source. Statistics pertaining to the reliability, validity, internal consistency, and unidimensionality are then provided. Last, the Likert-type scale values and anchors are
provided and followed by an exact wording of the items provided by the author(s) in the article. Here is an example of an
entry in Appendix S1:
Collaboration (Sinkovics and Roath 2004); Involves an independent relationship where the parties work closely together
to create mutually benecial outcomes for all participants
(Jap 2001, 87); 142 logistics managers from companies in
England, Scotland, Wales, and Northern Ireland involved in
outsourcing activities using third-party logistics (3PLs) (see
also Jap 1999).
*Coefcient alpha (.88); Factor score range (.66.90); Conrdf = 237,
matory
factor
analysis
(v2 = 333.03,
p-value ! .001, NNFI = .965, CFI = .970, RMSEA = .036,
IFI = .971); Item loading t-values (9.1714.19).
*7-point scale(1) Strongly Agree to (7) Strongly Disagree;
Our company and the service provider work together to
exploit unique opportunities in the market; Both companies
look for synergetic ways to do business together; Our companies work together to develop new ideas; We continually
share proprietary information with each other.
IJLM, IJPDLM, JBL, and TJ published a total of 976 articles
in 183 issues from 2001 to 2010. Of the total, 167 articles or
approximately 17% utilized multi-item scales in their analysis.
From 1961 to 2000, only 5.6% of the research articles
documented the usage of multi-item scales (Keller et al. 2002).
Scales Utilized in Logistics Research
87
Table 1 indicates the total number of scales reported in the articles from 2001 to 2010 to be 980 scales. Comparing this to the
rst three decades of logistics research (690 scales reported), the
discipline has achieved a 42% increase within the past 10 years,
alone [(980690)/690]. It is clear that researchers in logistics and
supply chain management have found survey research employing
multiple items increasingly useful for better capturing the conceptual domains of constructs not directly measurable utilizing
ratio metrics.
Scale categorizations
Table 1 lists the categories utilized by the authors to offer
broad categorization of the scales. First, scale descriptions and
items provided in each article were reviewed and categorized
by each author and discrepancies between authors were discussed and resolved. Four iterative rounds were necessary to
come to full agreement on the categorization of the scales. It is
important to note, however, that it was not our intention to
completely content analyze each scale and the conceptualization
provided in the research; rather, the categorization is used to
organize the scales in a manageable manner so that researchers
in the future may peruse categories to locate scales useful to
their research. Second, the authors started grouping scales under
the categories resulting from Keller et al. (2002). Scales were
added, some groupings changed, categories were added, and
some dropped.
Performance and Quality contained 188 scales, accounted for
19.2% of the total scales reported, and ranked rst in our categorization. In comparison, Keller et al. (2002) reported this category as ranked second with 117 scales totaling 17% of the total
scales. Examples of this category include:
Consequence (Inbound) (Svensson 2002); The negative consequences of disturbances, that is, the degree of negative impact
in the rms inbound logistics ows. Sample item: How often
or seldom do the disturbances in your companys inbound
logistics ows from subcontractors cause downtimes in the
manufacturing processes?
Financial Performance (Corsten and Felde 2005); Return on
assets (ROA), return on sales, and the improvement of both
measures compared to the industry average. Sample item:
Compared to the average in our industry our ROA has been
considerably better over the last three years.
Channel Relationships ranked second in this study (184 scales;
18.8% of total scales reported). Again, the percentages were similar to the results in Keller et al. (2002) with 17.4% of the total
reported scales, but the category ranked rst from 1973 to 2000.
Examples of this category include:
Altruism (Interorganizational Citizenship Behaviors) (Autry
et al. 2008); Behavior directed at helping a partner rm in
solving problems or acquiring needed skills/knowledge. Sample item: When our supplier is unable to fulll certain responsibilities, we try to be understanding.
Attachment (Knemeyer and Murphy 2005); Describes genuine
feelings toward the other company or that companys employees. Sample item: In times of need, this third party has gone
out on a limb for us.
Completing rankings three and four, Internal Relationships/
Personnel (third) and Information Sharing, Processes, and Technology (fourth) remained in their respective positions across both
studies. While positions one and two swapped categories, the top
Table 1: Scale categories

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Category
# of scales
% of total
Cumulative %
Performance and quality

Channel relationships
Internal relationships/Personnel
Information sharing, processes, and technology
Customer satisfaction and loyalty
Flexibility, responsiveness, and just-in-time
Organizational characteristics
Regulation-safety
Customer orientation
Logistics and transportation operations
Global/International
Environmental characteristics
Inventory
Security
Supplier selection
Corporate social responsibility
Reverse logistics
Brand image
Measurement
Education
Total
188
184
133
113
52
44
37
26
24
24
21
20
20
20
20
15
11
10
10
8
980
19.2
18.8
13.6
11.5
5.3
4.5
3.8
2.7
2.4
2.4
2.1
2.0
2.0
2.0
2.0
1.5
1.1
1.0
1.0
0.8
19.2
38.0
51.5
63.1
68.4
72.9
76.6
79.3
81.7
84.2
86.3
88.4
90.4
92.4
94.5
96.0
97.1
98.2
99.2
100.0
88
S. B. Keller et al.
Figure 1: Articles employing multi-item scales in leading logistics journals.*
Number of Articles
30
66
25
57
20
Total
IJLM
15
IJPDLM
32
JBL
10
TJ
13
6
5
1
0
1971-75 1976-80 1981-85 1986-90 1991-95 1996-00 2001-05 2006-10
Year
*The bar chart is on a separate scale from the line charts.
four categories were the same for both studies and accounted for
more than half of the scales reported (200110 = 63.1% cumulative; 19732000 = 56.4% cumulative).
Examples of Internal Relationship/Personnel include:
Behavior Management (Change Process-Refreezing Phase)
(Greer and Ford 2009); Consists of activities that provide
feedback on individual performance and incentives for acting
in a manner that promotes and reinforces desired behavior
during change implementation. Sample item: Were employees rewarded for working to support the change effort?
Centralization (Diffusion of Contingency Planning Process)
(Skipper et al. 2009); Degree of decision-making concentration. Sample item: Participation of subordinates in organizational decision making is encouraged.
Examples of Information Sharing, Processes, and Technology
include:
Adopting Information Technology (Zacharia and Mentzer
2004); The utilization of information technology in the industry. Sample item: How extensively is real-time product tracking used in your industry?
Business-to-Business (B2B) E-Commerce Implementation
(Iyer et al. 2004); Encompasses electronic data and information exchange (EDI) technology and application tools such
as the Internet and EDI that facilitate integration and management of core businesses processes between key supply
chain partners. Sample item: Rate the extent to which B2B
e-commerce has been used to generate cross-rm process
integration with key trading partners
Table 1 also indicates the category Customer Satisfaction and
Loyalty jumped from 13th (11 scales and 1.6%) (Keller et al.
2002) to 5th (52 scales and 5.3%) in this study.
Benevolence (Hofer et al. 2009); Extent that the customer
believes that the 3PL has intentions and motives benecial to
the customer when new conditions arise. Sample item: The

3PLs representativeHas made sacrices for us in the past.
Customer Loyalty (Cahill et al. 2010); Intention of a buyer of
logistics services to purchase the same services (retention)
and additional services (expansion) from the current provider
in the future, as well as the buyers activities in recommending this provider to others (referral). Sample item: Within our
organization, we have recommended preferential consideration
of this LSP for further projects.
While most other categories have remained similar in percentcontribution over the two studies, new to the categorization
are Regulation-Safety; Customer Orientation; Security; and Supplier Selection with each contributing 2%2.7% of the total
scales utilized from 2001 to 2010. The categories seem to be
related in that safety and security transcend the categories,
including customer orientation and supplier selection. There is
no doubt that the terrorist attacks on U.S. soil have initiated
the need for greater study of securing our supply chains and
keeping customers and stakeholders safe, as well as the general
public.
SCALE CHARACTERISTICS AND TRENDS
Figure 1 indicates an overall upward trend for the number of
articles published in the journals containing research utilizing
multi-item scales from 1973 through the past decade 200110.
Compared to the rst 30 years of research published in the journals, since 2000 researchers have published approximately 44%
more articles utilizing latent variables measured with scales (116
and 167, respectively). The same comparison by individual journal indicates an increase for IJLM (129%), IJPDLM (21%), JBL
(57%), and TJ (37%). A closer observation indicates an approximate 88% increase from 2001 to 2010 (167 articles utilizing
scales) over that appearing from 1991 to 2000 (89 utilizing
scales). The results are important indicators that the discipline is
advancing logistics and supply chain understanding through
89
Figure 2: Number of multi-item scales in leading logistics journals.*

563
220
200
Number of Scales
180
417
160
350
140
120
IJLM
100
IJPDLM
192
80
JBL
60
40
20
Total
35
4
TJ
69
40
0
1971-75 1976-80 1981-85 1986-90 1991-95 1996-00 2001-05 2006-10
Year
*The bar chart is on a separate scale from the line charts.
greater utilization of well-developed survey scales to measure

critical concepts within theories and nomological networks.
Trends comparing the number of multi-item scales utilized in
the four leading logistics journals appear in Figure 2. Data indicate a 42% increase in the most current decade (200110 = 980
scales) compared with the previous three decades (1971
2000 = 690 scales). While IJLM with a 120% increase [(143
65)/65] and TJ with a 96% increase [(16383)/83] realized the
greatest jumps in usage, JBL and IJPDLM led the way in scale
utilization, overall, and within the most recent decade (344 scales
and 330 scales, respectively). In fact, as IJPDLM and JBL
remain consistently strong in publishing research employing
multi-item scales, IJLM and TJ have made signicant progress,
as well. This is evidenced by the narrowing gap between the
data representing IJPDLM and JBL for the period 19712000
(542 scales, total) and IJLM and TJ, collectively for the same
period (148 total scales, a 266% difference), to the gap for the
period 200110, a 120% difference (IJPDLM and JBL = 674
scales; IJLM and TJ = 306 scales [(674306)/306]).
The results are very positive for all journals. This is further
apparent as the journals, in total, generated an approximate 80%
increase in utilization from the 10 year period 19912000 to the
most current 10 year period (200110).
Figure 3 illustrates the range pertaining to the number of items
per scale in the bar chart (a separate scale of 319). The y-axis
scale, 28, applies to the line graphs and the average number of
items per scale by journal and for all journals combined. Five
scales were deemed outliers and were removed from the analysis
depicted in Figure 3 [scale item outliers: 2001 TJ (20); 2003
JBL (20); 2005 IJLM (30); 2010 IJPDLM (24 and 27). While
there have been some recent shifts upward in average items per
scale for IJPDLM (200105 = 3.68 and 200610 = 5.05) and
JBL (200105 = 4.14 and 200610 = 4.19) and declines in average items per scale for IJLM (200105 = 4.70 and 2006
10 = 3.42) and TJ (200105 = 5.79 and 200620 = 4.85), all of
the journals averages continue to be acceptable and relatively
consistent for the past 15 years. Moreover, as would be
expected, the overall combined average number of items per
scale has remained consistent for the past 15 years (4.5 average
items in 19962000; 4.3 average items in 200105; and 4.47

average items in 200610).
The combined average coefcient alpha (.80 for 200105
and .83 for 200610) indicated in Figure 4 shows that the reliability and internal consistency of the scales utilized in leading
logistics journals are well within the range advocated in the literature. Average alphas for each journal also meet the requirement, and indicate that overall, the items representing logistics
scales published within the past 10 years are well structured.
The ranges of coefcient alpha reported (.51.97 for 200105
and .54.97 for 200610) are broad and are of some concern
as Keller et al. (2002) also found. The concern centers on the
utilization of scales that fall below the acceptable range of .60
for exploratory research when relying on the scales for
hypothesis testing and theory development. Researchers, editors, and reviewers must work to ensure that the measures
employed are of highest psychometric property standards so
that we do not draw conclusions about hypotheses based on
data that may be a function of poorly conceptualized and
poorly worded items.
Table 2 compares each journal and the journals combined
based on articles reporting of commonly accepted validity and
reliability analysis and results. Progress associated with the most
recent decade (200110) is also compared with that of the period
19712000 (Keller et al. 2002). In all cases, the number of journal articles utilizing multi-item scales has increased and with the
overall increase being 44%. Perhaps of greatest signicance is
that researchers have reported the results of CFA more over the
past 10 years than ever before in the history of each journal.
More than half of the scale articles in both IJLM (350%
increase) and JBL (239% increase) reported employing CFA,
while 42% of the articles published in IJPDLM and 46%
published in TJ also included CFAs representing a substantial
increase from nine articles and zero articles, respectively, from
the years 19712000.
Compared to the traditional factor analysis and principle components analysis, CFA offers a more rigorous test of the psychometric properties related to a constructs measurement model
survey items. CFA is utilized to test and conrm the properties
90
S. B. Keller et al.
Figure 3: Range and average number of items per scale in leading logistics journals.*
8
16
Number of Items
19
18
17
16
17
15
Range
IJLM
IJPDLM
JBL
TJ
Combined
3
3
2
1971-75 1976-80 1981-85 1986-90 1991-95 1996-00 2001-05 2006-10

Year
*2 is the minimum number of items per scale for all ranges. The bar chart is on a separate scale from the line charts.
Figure 4: Range and average coefcient alpha in leading logistics journals.*

1
.96
0.95
0.9
.93
.98
.97
.97
.91
.87
Coefficient Alpha
0.85
0.8
Range
Combined
0.75
IJLM
0.7
IJPDLM
JBL
0.65
0.6
TJ
.64
.60
0.55
.54
0.5
1976-80
1981-85
1986-90
.52
1991-95
.53
1996-00
.51
.54
2001-05
2006-10
Year
*Coefficient alpha was first introduced in 1977. Combined includes the average of IJLM, IJPDLM, JBL, and TJ.
The bar chart and line chart are on the same scale.
of well-developed scales as opposed to exploring the underlying

factor structure of a series of variables that originally may not
have been designed to measure a single dimension concept. The
results in Table 2 are encouraging for the discipline as they
clearly indicate a combined reduction in traditional exploratory
factor and principle components analysis while disclosing a signicant increase in the application of CFA within articles
employing multi-item scales. This implies that researchers are,
indeed, utilizing more highly developed scales and/or following
strict scale-development procedures for building more robust
scales to measure concepts important for advancing our knowledge of logistics and supply chain management. While TJ is the
only journal with an increase in reporting factor and principle
components analysis, the scales articles in TJ also went from
no CFA reports between 1971 and 2000 (Keller et al. 2002) to

46% in 200110.
Over 50% of the publications indicated that pretests were performed, and in all cases, more than 73% of the research employing multi-item scales reported reliability statistics. IJLM (22%)
and JBL (25%) articles most often reported assessments of discriminant validity by comparing average variance extracted (AVE)
from shared variance (SV) of pair-wise constructs.
Independently by journal and collectively, the results are
strong indicators that researchers of logistics and supply chain
management have made signicant progress over the past
40 years and in particular over the past decade in building a substantial base of valid and reliable multi-item measures representing the core concepts of the discipline.
91
Table 2: Percentage of articles reporting validity and reliability assessments in leading logistics journals (200110)
IJLM
Pretest
Factor/Principal components analysis
Coefcient Alpha/Kuder Richardson 20 reliability
Item-to-total correlations
Conrmatory factor analysis
Average variance extracted compared to shared variance
Total number of articles
(57)
(64)
(50)
(7)
(14)
(0)
(14)
IJPDLM
47
47
75
6
63
22
32
(38)
(64)
(56)
(4)
(9)
(0)
(45)
42
50
73
8
42
2
52
JBL
(58)
(93)
(75)
(28)
(23)
(8)
(40)
68
65
88
14
78
25
57
TJ
(41)
(53)
(65)
(6)
(0)
(0)
(17)
Combined
38
62
77
12
46
0
26
(47)
(72)
(63)
(13)
(13)
(3)
(116)
52
56
79
10
59
13
167
Coefcients within parentheses were reported by Keller et al. (2002) for 19712000.
Comparisons of peer disciplines top journals: Journal of

Business Logistics and Journal of Marketing
Similar to the results found by Keller et al. (2002), Table 3 indicates that the Journal of Marketing (JM) (n = 159), compared
with JBL (n = 57), has published more than two and a half times
the number of articles employing multi-item scales from 2001 to
2010. JBL published a 111% increase in articles utilizing multiitem scales within the most recent decade. JM also had a 152%
increase. The number of scales reported had a similar jump for
both journals within the past decade (JBL, 113% increase; JM,
169% increase). Substantial increases in each category were
achieved for both journals.
Observations relating to the properties of the published scales
within the two journals reveal very positive similarities between
JBL and JM. Over the past decade, JBL scales contained an average of 4.17 items per scale, while JM published scales had an
average of 3.99. Average coefcient alpha for each was above
the baseline advocated in the literature (JBL = .83; JM = .89),
and the researchers utilizing scales provided the results of CFA
over 70% of the time (JBL = 77%; JM = 72%). While this was
an increase in use for JM (19962000, 65%), it was a substantial
increase for JBL compared to the utilization of CFA from 1996
to 2000 (26%) and from 1971 to 2000 (23%).
Table 3 indicates that pretests were reported in more than half
of the scales publications (JBL = 68%; JM = 57%) and coefcient alpha was reported well over 85% of the time (JBL = 88%;
JM = 91%). While discriminant validity assessments utilizing
AVE compared with SV were reported in only 25% of the JBL
articles and 48% in JM, both percentages were greater than previous years. Based on the entire sample, however, it became
known that researchers were utilizing CFA analysis to evaluate
discriminant validity as well as unidimensionality. Researchers
interpret the strength of the loadings on the intended constructs
and the less than 100% correlation between constructs as evidence of discriminant validity. The AVE and SV analysis is a
more rigorous evaluation of discriminant validity, and while both
journals showed increases in its usage, researchers are encouraged to increase their reliance on the analysis.
CONCLUSION
Our data show substantial and sustained advancement in the
composition and construction of the multi-item measurement
Table 3: Descriptive statistics of multi-item scales in Journal of

Business Logistics and Journal of Marketing (200110)
JBL
Number of articles with scales
Number of scales
Average number of items per scale
Average coefcient alpha
Percentage of articles reporting
Pretest
Factor/Principal
components analysis
Coefcient
Alpha/Kuder
Richardson 20 reliability
Item-to-total correlations
Conrmatory factor analysis
Average variance extracted
compared to shared variance
(27)
(167)
(4.92)
(.81)
57
356
4.17
.83
JM
(63)
(505)
(4.48)
(.81)
159
1,356
3.99
.89
(59) 68
(81) 65
(60) 57
(46) 23
(93) 88
(89) 91
(33) 14
(26) 77
(11) 25
(22) 8
(65) 72
(32) 48
Note: Coefcients within parentheses were reported by Keller et al.

(2002) for 19962000.
scales representing a core element of the foundation supporting

logistics and supply chain management research. Assessment of
the articles appearing in four leading logistics research journals,
IJLM, IJPDLM, JBL, and TJ, indicates an increase/improvement
in the following areas:
1. Breadth and depth of scale categories representing core concepts within the discipline.
2. Number of articles employing multi-item scales.
3. Number of multi-item scales utilized.
4. Average coefcient alpha measuring reliability.
5. Average number of articles reporting the usage of pretesting.
6. Average number of articles reporting the usage of CFA.
7. Average number of articles reporting the usage of AVE
compared to SV for assessing discriminant validity.
Theory development requires strong measures to assure the
nal research results fully and accurately represent the theory
being tested. Poorly designed measures may mask the signi-
92
cance, magnitude, and direction of relationships among constructs within a theoretical model. It is clear that logistics and
supply chain researchers have amassed a robust foundation of
multi-item measures that have important valid and reliable characteristics. Researchers employing the scales for empirical testing
of hypotheses may have greater condence that their results are,
indeed, a function of the theory and not an anomaly of the measures.
Researchers of performance, quality, relationships (internal
and external), information sharing, processes, and technology
have the greatest bank of scales developed and are encouraged to
continue utilizing and rening the strength of these 618 scales.
Although these topics represent 63% of the cumulative total
scales over the most recent decade, it should also be indicative
of the topics of greatest interest to researchers, editors, reviewers,
and practitioners.
Topics new to the scale categories from that published in Keller et al. (2002) include regulation, safety, customer orientation,
security, supplier selection, reverse logistics, brand image, and
education. These represent a need for further exploration into the
concepts important for building knowledge specic to each area.
Perhaps a common element among the new categories is the
need to better develop our knowledge pertaining to controlling
our supply chains for customer, brand, and overall security benets. Knowledge within these topics is in greater need of exploration and development.
The driving force for this research was to provide researchers
a central document to reference when searching for developed
measures to utilize in future studies. The compendium of scales
appearing in Appendix S1 accomplishes this goal. It also may
assist in identifying additional articles that are related to the concepts and theories of immediate importance to researchers.
Along with studies of journal rankings and impact factors, our
comparisons of the statistics related to the multi-item scales utilized in JBL and JM over the most recent decade (200110) offer
signicant indications of the high quality and rigor of the
research published in JBL. It is hoped that the entire results of
this study further assist professors in justifying the strength of
our top logistics journals to our peers, chairpersons, deans, and
others that require support for rendering tenure and promotion
decisions.
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SUPPORTING INFORMATION
Additional Supporting Information may be found in the online
version of this article:
93
Appendix S1. The material in the Appendix was derived

directly from original articles.
SHORT BIOGRAPHIES
Scott B. Keller (PhD University of Arkansas) is Professor of
Logistics and Marketing at the University of West Florida. He
has been on faculty at Penn State and Michigan State. His
research interests include issues in personnel development and
performance, and the development of a market oriented culture
within logistics operations. He has conducted research for numerous corporations and his work has appeared in leading logistics
journals. He is the editor of the International Journal of Logistics Management and is on the editorial boards of the leading
logistics research journals. His managerial experience is in motor
carrier operations, warehousing, and ocean freight terminal operations.
Kimberly Hochard, Thomas Rudolph, and Meaghan Boden
are MBA graduates of the University of West Florida.

A Multidisciplinary Approach to Supply Chain Agility:

Conceptualization and Scale Development
David M. Gligor1, Mary C. Holcomb2, and Theodore P. Stank3
1
University of Missouri-Kansas City

University of Tennessee
3
University of Tennessee
2
lthough agility has been identied as one of the most important issues of contemporary supply chain management, the theoretical basis
for understanding supply chain agility is fragmented. This research addresses the gap related to the ambiguity surrounding the dimensions
and denitions of rm supply chain agility by employing a multidisciplinary literature review to gain an in-depth understanding of agility. In
addition, a comprehensive measurement instrument that draws on the foundations of social and life science theory is developed and empirically
validated. The results of the research indicate that rm supply chain agility is composed of ve distinct dimensions including alertness, accessibility, decisiveness, swiftness, and exibility. Based on these elements, a comprehensive denition of rm supply chain agility is developed for
further theoretical testing of the concept.
Keywords: agility; rm supply chain agility; supply chain agility; scale development
INTRODUCTION
Agility has emerged as the dominant competitive vehicle for
organizations operating in uncertain and ever-changing business
environments, and has been heralded as the business paradigm of
the 21st century (Tseng and Lin 2011). The concept has risen in
signicance as businesses no longer compete as solely autonomous entities, but rather as supply chains (Lambert and Cooper
2000; Christopher 2005; Defee and Stank 2005; Stank et al.
2005). Supply chain members must be capable of rapidly aligning their collective capabilities to respond to changes in demand
and supply (Gligor and Holcomb 2012a). Furthermore, it has
been recognized that to achieve a competitive advantage in the
rapidly changing business environment, rms must align with
suppliers and customers to coordinate operations and together
achieve a level of agility beyond that of competitors (Lin et al.
2006). As supply chain agility has progressed from a conference
topic to a practical imperative for most companies (White et al.
2005), agility has been highlighted as the fundamental characteristic of the best supply chains (Lee 2004).
Although agility has been identied as one of the most important issues of contemporary supply chain management (Lee
2004), the theoretical basis for understanding supply chain agility
is fragmented (Li et al. 2008). Agility is a broad and multidimensional concept bridging many disciplines (Gligor and
Holcomb 2012a). The multidimensionality of agility has led to
much confusion and ambiguity (Giachetti et al. 2003; Li et al.
2009; Gligor and Holcomb 2012a). Elements and linkages
among agility elements are underdeveloped, and it is uncommon
for any two articles to adopt the same denition (Conboy 2009).
A rigorously validated instrument to measure supply chain agility
David M. Gligor, University of Missouri-Kansas City, Department
of Marketing and Supply Chain Management, Henry W. Bloch
School of Management, 5100 Rockhill Rd., Kansas City, MO
65110, USA; E-mail: mars2u7@yahoo.com
is needed to enable researchers to credibly test explanatory theories regarding causal links among capabilities, practices, and performance outcomes related to this phenomenon (Sherehiy et al.
2007; Li et al. 2009).
This research addresses the gap related to the ambiguity surrounding the dimensions and denitions of rm supply chain
agility by employing a multidisciplinary literature review to gain
an in-depth understanding of agility. Specically, the sports
science and military science theoretical bases are investigated to
better understand agility and identify its dimensions, and dene
it in a rm supply chain context. Furthermore, a comprehensive
measurement instrument that draws on the foundations of social
and life science theory is developed and empirically validated.
LITERATURE REVIEW
Scholars from multiple business disciplines have dened agility
in ways that emphasized different aspects of the concept. Gligor
and Holcomb (2012a) note that to date, many different denitions and characterizations of agility have appeared in the business literature. Through their comprehensive examination of the
literature, the authors found that the denition and concept of
agility is evolving. For example, much of the earlier research
focused on agility as an ability that enabled rms to thrive in an
environment of continuous and often unanticipated change (Gunasekaran 1998, 1999; Dove 1999; Shari and Zhang 1999; Sarkis 2001). More recently, Vinodh (2010) conceptualizes agility
as a paradigm that facilitates companies to quickly respond to
customers dynamic demands. The concept, which initially
concentrated on manufacturing, has expanded to become a wideranging response to a myriad of business challenges in a
turbulent environment (Yauch 2011; Zhang 2011). Despite the
evolution of the concept, inconsistencies in the multiple business
denitions of agility have been further manifested in the existing
supply chain research in its treatment of agility as a rm concept.
As Gligor and Holcomb (2012a) indicate, few researchers
Firm Supply Chain Agility
provide a formal supply chain agility denition, and there is no

agreement on the dimensionality of the concept (Li et al. 2008).
For example, Swafford et al. (2006) dene it as the capability to
adapt or respond in a speedy manner to a changing marketplace
environment, whereas Costantino et al. (2012) dene it as a network of different companies integrated with streamlined material,
information, and nancial ow, and focused on exibility and
performance.
Swafford et al. (2006) approach supply chain agility as a unidimensional construct, while acknowledging its multidimensionality. Li et al. (2009) identify the alertness to change and the
response capability dimensions. The resultant measurement
instrument characterizes supply chain agility in terms of six factors: strategic alertness, strategic response capability, operational
alertness, operational response capability, episodic alertness, and
episodic response capability. One signicant research limitation
is the lack of detail on the composition of the response capability. An agile supply chain is described as being alert to changes
and capable of responding to changes. However, no information
is offered on how the response capability is developed or what
that capability entails.
Braunscheidel and Suresh (2009) dene rm supply chain
agility as a second-order construct that is formed by the rstorder dimensions of demand response, joint planning, customer
responsiveness, and visibility. A signicant weakness of this operationalization is the lack of theoretical rationale surrounding its
development. No information is offered on how the four dimensions were identied.
The current research develops a comprehensive conceptualization and measurement scale of rm supply chain agility that
explores the multidimensionality of the concept. Foundational
social and life science theory identies ve rm supply chain
agility dimensions, including alertness, accessibility, decisiveness, swiftness, and exibility. The dimensions are used to dene
a rms supply chain agility as a rms ability to quickly adjust
tactics and operations within its supply chain to respond or
adapt to changes, opportunities, or threats in its environment.
The following subsections present the literature review that lead
to the emergence of the supply chain agility dimensions.
Alertness
Alertness, dened here as the ability to quickly detect changes,
opportunities, and threats, emerged from a variety of domains
both in foundational social and military science as well as in
business. In sports science discipline, Sheppard and Young
(2006) describe alertness as a rapid whole-body movement with
change in velocity or direction in response to a stimulus, whereas
Farrow et al. (2005) dene agility as basic movements requiring
the player to perform sudden changes in body direction. The
ability of players to execute agility tasks is considered dependent
on factors such as visual-scanning techniques, visual-scanning
speed, visual processing, perception, and anticipation (Chelladurai 1976; Abernethy et al. 1999; Young et al. 2002; Sheppard
and Young 2006). These factors are reected in the players oneld agility (Gore 2000). It has been suggested that elite
performers differ from nonelite performers in their ability to
anticipate the opponents movements (Abernethy and Russell
1987). Some agility tests indicate that high-performance sports
95
players initiate a change in direction movement before the opponents ball release due to anticipation of the other players movements (Sheppard and Young 2006). Visual search and
anticipation research have also shown that highly skilled athletes
are able to successfully predict the action of an opponent before
it is carried out (Bradshaw et al. 2010). The national protocol for
the assessment of agility performance in team-sport athletes also
recognizes the role of alertness and suggests that the athletes
ability to successfully use agility maneuvers in the actual game
depends on factors such as visual processing, timing, reaction
time, perception, and anticipation (Ellis et al. 2000).
Various conceptualizations of alertness have been introduced
in military science. Dekker (1999) sees agility as the ability to
perceive an upcoming threat and respond to it quickly, while the
U.S. Army denes it more simply as the ability of friendly forces
to act faster than the enemy (US Army 1997). It has been suggested that creating an agile military force requires speeding up
the so-called OODA (observe, orient, decide, act) loop (Fewell
and Hazen 2005). The concept of an OODA loop was developed
by military strategist USAF Colonel John Boyd, and was originally applied at the operational and strategic levels in military
combat operations. The alertness dimension of agility is captured
within the observe and orient stages of the loop and is a prerequisite to an agile response. Some military science researchers
refer to the alertness capability as situational awareness, and
describe it as the perception of environmental elements with
respect to time and space (Dekker 2006; Sheffer 2006). The
speed of recognition of environmental elements is considered
critical (Alberts 2007). In combat, military forces require early
awareness of upcoming threats. The quicker changes are
detected, the sooner the response can be deployed.
The dimension of alertness has also been a focus of business
agility research. Shari and Zhang (1999) recognize that agile
organizations need a basic ability that consists of sensing, perceiving, and anticipating changes in the business environment.
Zhang and Shari (2000) divide agility capabilities into four
major categories: responsiveness (ability to identify, respond to,
and recover from changes quickly, reactively or proactively),
competency (ability to efciently and effectively realize enterprise objectives), exibility/adaptability (ability to implement
different processes and apply different facilities to achieve the
same goals), and speed (ability to complete an activity as quickly
as possible). Although it introduces some of the possible dimensions of agility, Zhang and Sharis (2000) conceptualization is
problematic. One limitation of this conceptualization is the lack
of distinction between the ability to detect changes and the ability to respond to changes. These two distinct capabilities are
grouped under the responsiveness umbrella. This research
expands on Zhang and Sharis (2000) work and posits alertness
as a distinct dimension of agility. Other research articles also recognize the role of alertness in the design of agile manufacturing
systems (Goldman et al. 1995; Almahamid et al. 2010; Inman
et al. 2011; Vinodh and Prasanna 2011; Zhang 2011).
The role of alertness in achieving the desired level of agility is
also emphasized within the information systems and information
systems development research. Sarker and Sarker (2009) argue
that agility lies in environmental scanning and sense-making
routines for anticipating and recognizing possible or imminent
crises, whereas other authors emphasize the important role of
96
sensing market opportunities and threats (Tallon and Pinsonneault 2011; Tseng and Lin 2011; Lu and Ramamurthy 2012).
Within a supply chain management context, Christopher (2000)
was the rst to acknowledge that, to be truly agile, a supply
chain must be capable of reading and responding to real
demand. He refers to this capability as market sensitivity. One
limitation of Christophers (2000) interpretation is that although
he recognizes the importance of reading customers requirements, he does not conceptualize it as a distinct capability; he
places it in the same category with the responding to real
demand capability. Another drawback of Christophers (2000)
research is that it only recognizes the importance of reading
demand information, with no reference to supply.
Other supply chain researchers also recognize that agility
requires a timely awareness of change and adopt the market sensitivity dimension introduced by Christopher (Lin et al. 2006;
Agarwal et al. 2007; Jain et al. 2008). However, it was Li et al.
(2008) that rst conceptualized alertness as a distinct dimension
of supply chain agility. These authors argue that agile supply
chains must be alert to changes, within the supply chain itself
and within the surrounding environment. This dimension of agility manifests itself through sensing emerging market trends,
listening to customers, and monitoring real demand through daily
point-of-sale data (Li et al. 2008, 2009).
Accessibility
Accessibility emerged from the literature review as the second
dimension of rm supply chain agility. It is dened in this study
as the ability to access relevant data. Research suggests that
once a change is detected through the alertness capability, rms
must also be able to access relevant data to decide how to provide an agile response (Gunasekaran 1998; Sharp et al. 1999;
Jain et al. 2008; Tseng and Lin 2011; Vinodh and Prasanna
2011; Lu and Ramamurthy 2012).
Supply chain-wide information access is recognized as a key
requirement for supply chain agility (Vinodh and Prasanna 2011;
Gligor and Holcomb 2012b). In his seminal article, Christopher
(2000) argues that agile supply chains must possess a number of
distinguishing characteristics. Agile supply chains must be virtual, that is, they must be information-based rather than inventory-based. Supply chain members must share real-time demand,
inventory, and production information (Ahn et al. 2012). The creation of virtual supply chains allows all supply chain members to
access relevant data and make informed decisions about how to
respond to changes detected in the environment. Lin et al. (2006)
refer to the capacity to access information as information integration, and describe it as the ability to use information technology
to share data between buyers and supplies. Information integration can be considered as the infrastructure needed to create a
virtual supply chain (Christopher et al. 2004; Jain et al. 2008).
Manufacturing research also suggests that a requirement for
designing agility is the creation of an environment where relevant information can be accessed. Goldman et al. (1995) consider the formation of virtual partnerships to be one of the four
primary principles of agility. This perspective is supported by
other manufacturing research articles that identify virtual enterprises, information technology, and communication as the key
enablers of agility (Gunasekaran 1998; Sharp et al. 1999; Khalil
D. M. Gligor et al.
and Wang 2002; Cao and Dowlatshahi 2005; Eshlaghy et al.

2010; Zhang 2011; Costantino et al. 2012). Information systems
and information systems development research also provide substantial empirical evidence for considering information integration as a key enabler of agility (Clark et al. 1997; Zaheer and
Zaheer 1997; Gosain et al. 2005; Van Oosterhout et al. 2006;
Mathiassen and Vainio 2007; Flink and Neumann 2007; Zhang
and Shari 2007; Goodhue et al. 2009; Tseng and Lin 2011; Lu
and Ramamurthy 2012). A high level of integration makes possible timely and accurate information gathering and sharing (Lu
and Ramamurthy 2012). Real-time access to information allows
supply chain members to quickly detect changes in customers
needs (Overby et al. 2006). Sheffer (2006) considers the ability
to provide an agile response contingent upon effective information collection and dissemination. This perspective is also shared
by Atkinson and Moffat (2005) who argue that information
availability is a necessary condition for agility.
Decisiveness
Dened in this research as the ability to make decisions resolutely, decisiveness was identied as the third dimension of rm
supply chain agility. Sports science and military science research
suggest that agility is dependent on the ability to make resolute
decisions using the available information. Motor learning
researchers have recognized the role of decision making in agility
tasks. They managed to isolate the decision-making time of players to evaluate its contribution to agility performance (Sheppard
and Young 2006). Decision-making time is measured by the time
elapsed between the moment a stimulus is presented to the player
and the players movement initiation (Bradshaw et al. 2010).
Researchers control the alertness and accessibility aspects of agility by presenting the stimulus to the player (limited need for
detection) and by offering the information on how to respond to
the stimulus (limited need for information accessibility).
The impact of decision-making abilities on agility has been
investigated across a variety of sports-related contexts (Chelladurai 1976). Helsen and Pauwels (1988) present expert and novice
soccer players with a life-size lm display of various tactically
oriented patterns of soccer drills. The subjects were asked to
physically respond to the footage when the ball appeared to be
kicked toward them by shooting for goal, passing to a team
mate, or dribbling past an opponent. The simulation revealed that
expert players possess superior decision-making skills as compared with novice players. Research shows that superior performance in open-skilled sports is ultimately determined by
effective decision-making skills (Abernethy 1991). Offensive
players, who demonstrate procient agility, employ superior
decision-making skills in response to the movements and body
positions of the opposing defenders (Sayers 2000). Wheeler and
Sayers (2010) research of rugby players investigated the role of
decision-making abilities when executing agility tasks. The
authors concluded that decision-making drills must be incorporated in agility training programs (Wheeler and Sayers 2010).
Their ndings concur with other research that has shown that the
inclusion of decision-making elements results in different levels
of agility performance (Farrow et al. 2005; Sheppard and Young
2006; Bradshaw et al. 2010). Within Australian Rules football,
decision-making skills were found to be the important agility
enablers as they help offensive players successfully evade opponents (Bradshaw et al. 2010).
In their denition of agility, Young et al. (2002) recognize
that the two main components of agility are change in direction
speed and decision-making factors. Other agility conceptualizations also acknowledge the contribution of decision-making abilities to agility performance in sports (Chelladurai 1976;
Abernethy et al. 1999; Sheppard and Young 2006). Research
also suggests that, as the complexity of the task increases, decision-making skills become more important (Sheppard and Young
2006). The increase in complexity affects an athletes performance as evidenced by the weak correlation between straight
sprinting ability and the ability to perform complex agility tasks
(Tsitskarsis et al. 2003). The decision-making component of agility can help explain why straight sprinting performance (no decision making required) has little to do with agility performance.
Previous research has observed less than 50% commonality
between reactive (decision required) and preplanned (no decision
required) agility performance (Farrow et al. 2005).
In a supply chain context, Christopher (2000) makes a clear
distinction between speed (meeting customer demand through
shortened delivery lead times) and agility (responding quickly to
changes in demand in terms of both volume and variety). Military science research also recognizes the importance of decisiveness. The decide phase is one of the components of the OODA
loop (Fewell and Hazen 2005). A three-step sequential process
takes place during the decide phase: options generation, best
option selection, and best option adaptation. Speeding up the
decide phase is suggested to result in a more agile response
(Dekker 2006).
The above literature review indicates that to develop supply
chain agility, it is not enough to create the abilities to quickly
detect changes (alertness) and access relevant information on
how to deal with changes (accessibility). Firms must also foster
the ability to make resolute decisions on how to respond to
changes (decisiveness). Combined, the alertness, accessibility,
and decisiveness dimensions of agility form the cognitive area of
rm supply chain agility. These dimensions are related to information-processing and allow the rm to determine what actions
to take in response to changes, opportunities, or threats.
Swiftness
Once a decision is made on how to respond to changes, entities
must be able to quickly implement those decisions (Sharp et al.
1999; Gunasekaran and Yusuf 2002; Lin et al. 2006; Alberts
2007; Jain et al. 2008; Mackley et al. 2008). Swiftness, the
fourth dimension of agility, is dened as the ability to implement
decisions quickly. Sports and military science research recognize
the enabling role of swiftness in fostering agility. Research on
the effects of agility training on athletic power performance indicates that agility is highly dependent on the athletes speed of
movement (Sporis et al. 2010). Various sports agility tests have
also identied change in direction speed as one of the pivotal
components of agility (Young et al. 2002; Farrow et al. 2005).
Although the terminology might vary across research articles
(e.g., quickness, rapidness, swiftness, speed, velocity), a majority
recognize swiftness as an essential component of agility (Clarke
1959; Mathews 1973; Draper and Lancaster 1985; Bloomeld
97
et al. 1994; Moreno 1995; Twist and Benicky 1996; Sayers

2000; Young et al. 2002; Tsitskarsis et al. 2003; Sheppard and
Young 2006). Military science research also acknowledges swiftness by emphasizing the role of speed of movement (Dekker
2006) and speed of action (Alberts 2007; Mackley et al. 2008)
in facilitating an agile response.
In business research, Christopher (2000) suggests that one of
the required capabilities of agile supply chains is quickness, and
denes it as the ability to complete an activity as quickly as possible. This ability is consistently recognized as a key enabler of
agility across supply chain management research (Sharp et al.
1999; Lin et al. 2006; Jain et al. 2008). Swiftness is also captured within Li et al.s (2008, 2009) response capability dimension of rm supply chain agility. Kumar and Motwani (1995)
refer to the swiftness dimension of agility as the ability to accelerate activities on a critical path.
Manufacturing research provides additional support for considering swiftness a dimension of agility. Shari and Zhang (1999)
argue that quickness is one of the necessary capabilities of an
agile organization. They describe it as the ability to carry out
tasks and operations in the shortest possible time. Kidd (1994)
also recognizes that agile entities are fast moving, and Zhang
(2011) considers quickness a characteristic of agile rms. In fact,
agility as a business concept is centered around speed (Gunasekaran and Yusuf 2002). In one of the most frequently referenced
articles on agile manufacturing, Gunasekaran (1998) identies
elements of swiftness (e.g., rapid partnership formation) as key
agility enablers. A review of agility denitions (see Gligor and
Holcomb 2012a) reveals that most conceptualizations of the construct place signicant emphasis on speed (Iaccoca Institute
1991; Nagel and Dove 1991; Gehani 1995; Gupta and Mittal
1996; Quinn et al. 1997; Narasimhan et al. 2006; Eshlaghy et al.
2010; Zhang 2011).
Flexibility
The fth dimension of supply chain agility, exibility, is dened
as the ability to modify the range of tactics and operations to the
extent needed. Sports science researchers consider exibility to
be a key element of agility. In their research on agility training,
Sporis et al. (2010) highlight the impact of exibility on agility.
Research shows that agility performance can be improved
through exibility training (Wong et al. 2011). Military science
research provides additional support for considering exibility as
an important element of agility. This body of literature recognizes that built-in exibility is needed for agile military response
(McNaugher et al. 2000; Atkinson and Moffat 2005).
Business research also suggests that a rms response to
changes depends on the exibility of its supply chain tactics and
operations (Hong et al. 1996; Christopher and Towill 2002;
Kumar and Deshmukh 2006; Swafford et al. 2006; Swafford et al.
2008; Eshlaghy et al. 2010; Jacobs et al. 2011; Costantino et al.
2012). In a sports context, the athletes mobility of joints (i.e.,
exibility) controls the range of quick adjustments the athlete
can perform. The type of direction change (agility) performed
will be dependent on the exibility of the specic body parts
involved in the exercise. Similarly, a rms supply chain operates
within a specic range, and the rms supply chain agility (i.e.,
adjustment of tactics and operations) will be constrained by that
98
range. For example, the rms supply chain cannot quickly produce more items than its xed manufacturing capacity allows.
Supply chain agility literature recognizes the role of exibility
in providing an agile response. Empirical research found a direct
positive relationship between procurement and manufacturing
exibility and supply chain agility (Swafford et al. 2006). In
their framework, Swafford et al. (2006) consider supply chain
agility as an externally focused capability that is derived from
exibility (internally focused competency) in supply chain processes. Research also indicates that supply chain exibility
directly and positively impacts supply chain agility (Swafford
et al. 2008). Other supply chain researchers recognize the role of
exibility. In their denition of supply chain agility, Li et al.
(2008, 2009) consider exibility to be a core aspect of the construct. Similarly, this perspective nds support in a number of
supply chain agility frameworks (Christopher 2000; Lin et al.
2006; Jain et al. 2008).
Flexibility has long been identied as a key agility dimension
across manufacturing research. Agility as a business concept was
rst coined in relation to exible manufacturing systems (Nagel
and Dove 1991). The idea of manufacturing exibility was subsequently extended into a wider business context, and the concept of agility as an organizational trait was born (Christopher
and Towill 2002). The role of exibility in providing an agile
response is highlighted within several agility denitions. Hong
et al. (1996) dene agility as exibility and rapid response to
market demands, whereas Eshlaghy et al. (2010); describe it as
a model that provides exibility. In one of the most referenced
frameworks of manufacturing agility, Shari and Zhang (1999)
propose exibility to be one of the capabilities that an agile organization must possess. This perspective is supported by a number
of empirical research articles within the manufacturing realm
(Yusuf et al. 1999; Gunasekaran and Yusuf 2002; Kumar and
Deshmukh 2006; Eshlaghy et al. 2010; Jacobs et al. 2011;
Costantino et al. 2012).
The rm supply chain agility construct
The examination of previous research also guided the classication of the agility dimensions into two higher echelon categories:
physical and cognitive. Research suggests that swiftness and exibility represent the physical dimensions of rm supply chain
agility; alertness, accessibility, and decisiveness exemplify the
cognitive dimensions of the concept. The cognitive dimensions
of rm supply chain agility are related to information-processing
and help rms to determine what actions to take, while the physical dimensions are related to action-taking and enable rms to
implement those actions (see Table 1).
To clearly establish the relationship between supply chain agility and its dimensions, it is important to determine whether the
supply chain agility construct is reective or formative. Three
theoretical considerations can help distinguish formative models
from reective ones (Coltman et al. 2008). The rst theoretical
criterion is the nature of the construct. In reective models, the
latent construct exists independent of the measures used, whereas
in formative models, the latent construct is determined as a combination of its indicators (Rossiter 2002; Borsboom et al. 2003).
The second theoretical consideration pertains to the direction of
causality between items and the latent construct. In reective
D. M. Gligor et al.
Table 1: Summary and classication of rm supply chain

agility dimensions
Dimension
Alertness
Accessibility
Decisiveness
Swiftness
Flexibility
Denition
Type
Ability to quickly detect changes,

opportunities, and threats
Ability to access relevant data
Ability to make decisions
resolutely
Ability to implement decisions
quickly
Ability to modify the range of
tactics and operations to the
extent needed
Cognitive
dimensions
Physical
dimensions
models, variation in the construct causes variation in item measures, whereas in formative models, variation in item measures
causes variation in the construct (Bollen and Kwok-Fai 2000;
Edwards and Bagozzi 2000; Diamantopoulos and Siguaw 2006).
The third theoretical criterion considers the characteristics of the
items used to measure the construct. In reective models, items
are manifested by the construct and share a common theme. In
formative models, items dene the construct and need not share a
common theme (Rossiter 2002; Jarvis et al. 2003). Based on
these theoretical considerations and consistent with prior research
(i.e., Li et al. 2009), rm supply chain agility is operationalized
as a second-order reective construct with the rst-order factors
of alertness, accessibility, decisiveness, swiftness, and exibility
(Figure 1).
METHOD
Following the identication of the dimensions of supply chain
agility, the next phase of the research was to develop and test
scales for each of the factors. The procedures used to develop
and assess the validity of the agility scale are described below.
Scale development and survey design
Scale development followed procedures and guidelines recommended by Churchill (1979), DeVellis (1991), Hinkin (1995),
Mentzer and Flint (1997), and Garver and Mentzer (1999). Each
dimension of the second-order construct is measured by multi-item
scales to increase reliability, decrease measurement error, ensure
greater variability among the survey participants, and improve
Figure 1: Dimensions of rm supply chain agility.

Firm Supply
Chain Agility
Alertness
Accessibility
Decisiveness
Swi ness
Flexibility
99
validity (Churchill 1979). Based on the literature review presented

above, a pool of 33 items was generated to reect each of the rm
supply chain agility dimensions. To avoid scale proliferation,
when possible, existing scales were consulted (Bruner 2003).
Once the survey items were determined, the procedures suggested by Dillman (2007) for survey design were employed. All
variables of interest were estimated through respondents perceptual evaluation on a 7-point Likert scale: the response categories
for each item were anchored by 1 (strongly disagree) and 7
(strongly agree).
level of .70 (Moore and Benbasat 1991), which was considered

acceptable for exhibiting content validity, while the interjudge
agreement exceeded the recommended .65 value (Perreault and
Leigh 1989). Based on these results, and the qualitative feedback
received from the managers, six survey items were revised and
one was eliminated. Ultimately, six items were used to measure
alertness, seven items to measure accessibility, six items to measure decisiveness, ve items to measure swiftness, and six items
to measure exibility. These items were used for the nal model
testing.
Pretests of the supply chain agility measurement scale
Data collection and sampling for nal model testing
The scale items were pretested to increase reliability, decrease

measurement error, and improve the validity of the construct
measurement (Dillman 2007). A Q-sort method was employed to
achieve these goals (Moore and Benbasat 1991; Li et al. 2009).
The pretest was conducted in two stages: the rst one was conducted with a sample of academics and the second with a sample
of supply chain managers.
For the rst phase of the pretest, a personalized email with a
link to a Qualtrics-based Q-sort electronic document was sent to
a group of 25 academic experts. The academic experts were
selected based on their research interests, area of expertise, and
industry experience. The document contained the survey items
for the supply chain agility construct, along with the denition
of each construct dimension. Respondents were asked to place
each item under the dimension they felt best represented the
item. Furthermore, the experts were asked to evaluate the items
for face validity and provide qualitative feedback. Twenty
responses were received, for an effective response rate of 80%.
Based on the item placement ratios and the qualitative feedback
received from academic experts, some survey items were revised,
while others were selected for elimination. The purpose of the
pilot test was to identify poor performing items rather than create
highly puried scales (Defee et al. 2009).
Next, the resultant survey instrument was pretested using a
random sample of supply chain managers drawn from a database
of potential participants. The database of mid- and upper-level
logistics, supply chain, and operations managers of North American companies was obtained from Dun & Bradstreet, a provider
of business information. Potential respondents were carefully
screened to ensure that they had relevant knowledge of their
rms supply chain operations. A similar procedure to the one
employed during the rst phase of pretesting was employed. A
personalized email, with a link to a Qualtrics-based Q-sort electronic document, was sent to a sample of 272 managers. Onehundred responses were received, resulting in a response rate of
27.2%. The managers represented a wide array of industry
sectors including manufacturing-general (16%), manufacturingconsumer products, transportation (15%), retail (9%), and 12
other sectors, which accounted for the remaining 40% of respondents. Annual sales for the respondents companies ranged from
less than $250 million to greater than $9 billion. The modal
group was represented by companies with revenues of less than
$250 million (22%). Also, the level of professional work experience exceeded 20 years for 49% of the respondents.
The results of the second Q-sort pretest indicated that, except
for four items, item placement ratios exceeded the recommended
The unit of analysis for the research is the rm, and the preferred
target respondents were senior-level managers with knowledge of
supply chain processes and activities, and direct involvement in
operational and strategic decision making. Data were gathered
using a nonexperimental survey methodology (Kerlinger and Lee
2000). Specically, the research employed an Internet survey to
collect the necessary data for model testing. The web-based survey approach is appropriate because the population of interest is
business, and coverage issues are not present due to high rates of
computer use and the large sample size (Dillman 2007).
Purposive sampling was employed in the hopes of achieving a
moderate level of external validity and to contribute to the generalizability of results (Cook and Campbell 1979). Potential
respondents were identied from two sources. The rst source of
potential participants was a database of supply chain managers
that comprised the mailing list of the supply chain management
program of a large public university. The database contained
contact information for more than 3,000 managers (name, phone
number, email, and title) from U.S.-based companies in a diverse
set of industries. An email was sent to all contacts in the database requesting participation in the study. The Qualtrics software
indicated that the email was received and opened by 285 respondents, conrming that correct/updated contact information existed
for these managers. Therefore, this sample of 285 respondents
was considered for nal survey testing. To increase response
rate, participants were offered an executive summary of the
research ndings and entered into a rafe for the chance to win
$100.
The second source of potential participants was selected from
the panel members of SurveyMonkey, a large third party marketing rm that specializes in survey data collection. SurveyMonkey
provided contact information for 1,135 senior-level managers of
diverse backgrounds, with the knowledge of supply chain processes and activities, and direct involvement in operational and
strategic decision making who were prequalied to participate in
the study. Although participants were not provided any direct
nancial incentives, SurveyMonkey pledged to donate $.50 to
the charity of the respondents choice, and enter the respondents
into a rafe for the chance to win $100.
Potential respondents from both databases (university supply
chain program and SurveyMonkey) were prequalied using the
procedures suggested by Dillman (2007) and Kerlinger and Lee
(2000). Following the purication of the measurement instrument, the main survey test was sent to the sample of 285 potential respondents selected from the database of the universitys
supply chain program, and the sample of 1,135 prequalied
100
D. M. Gligor et al.
SurveyMonkey panel members. Two reminders spaced one week

apart followed the initial email to the sample of universitys supply chain members. Once all the data collection methods had
been concluded, 141 usable responses were received from the
sample of the university supply chain program contacts for a
response rate of 49.5%. Five hundred and thirty usable responses
were received from the SurveyMonkey panel members for a
response rate of 46.7%. No reminder was sent to the SurveyMonkey panel members because of the initial high response rate.
Responses from the two samples were compared using analysis
of variance (ANOVA) and no signicant differences were found.
Combined, the two samples generated a total of 671 usable
responses, which provided adequate statistical power to perform
the necessary analysis. The demographics information for the
nal group of respondents is presented in Table 2.
For the survey sent to the sample of university supply chain
program contacts, nonresponse bias was initially assessed by
comparing rst and second waves of survey responses using
ANOVA (Armstrong and Overton 1977). Nonresponse bias was
also examined using the guidelines suggested by Mentzer and
Flint (1997). A random sample of 30 nonrespondents was contacted and asked to respond to ve nondemographic questions.
Specically, the ve questions addressed the construct of rm
supply chain agility. A similar procedure was employed to test
nonresponse bias for the SurveyMonkey panel members: a random sample of 30 nonrespondents was contacted and asked to
respond to ve nondemographic questions. For both samples
(university supply chain program and SurveyMonkey panel members), no statistical difference was found between the answers to
these questions of respondents and nonrespondents. Therefore,
nonresponse bias is not considered a problem with the data.
Scale purication
Prior to purication of the measurement items, basic statistical
analyses of the collected data were performed, such as examination of mean, minimum, and maximum values, standard devia-
tion, and normality tests (i.e., skewness and kurtosis). The

primary approaches for measurement item purication included
multiple iterations of conrmatory factor analysis (CFA), with
the maximum likelihood estimation method that iteratively
improves parameter estimates to minimize a specied t function. In addition to the statistical analyses, theoretical assessment
was made prior to nal deletion of any measurement items.
When modifying the model, indicators such as offending
estimates, squared multiple correlations (SMCs), standardized
residual covariances, and modication indices were considered.
In the category of offending estimates, a check was performed
for negative error terms, standardized coefcients exceeding or
very close to 1.0, and very large standard errors. SMCs were
reviewed as well to locate any relatively small SMC values that
indicate that the portion of a variables variance, that is
accounted for by its predictor, is minimal at best (Joreskog and
Sorbom 1989). Any SMC values of .20 or less were put to the
test of deletion. Standardized residuals are the differences
between the observed covariance and the estimated covariance
matrix, and signicant residuals (greater than |2.58|, which is statistically signicant at the .05 level) indicate a substantial prediction error for a pair of indicators (Hair et al. 1998).
The modication index (MI) is a measure of whether an item
loads on multiple factors. For the value of the MI, a coefcient
value equal or greater than 3.85 indicates that chi-square can be
statistically signicantly reduced with the estimation of the coefcient. If a more conservative approach is taken, a value of MI
equal to or greater than 10 would recommend an item for deletion (Fassinger 1987). The more conservative value of 10 was
used for this research based on the assumption that most of the
multiloaded items had already been screened out in the pretest.
Following the purication of the measurement instrument, all 30
items that were used to measure the dimensions of rm supply
chain agility were retained including: six items used to measure
alertness, seven items to measure accessibility, six items to measure decisiveness, ve items to measure swiftness, and six items
to measure exibility.
Table 2: Demographics for the nal test sample

Level of professional
work experience
Percentage
<1 year
13 years
35 years
510 years
1015 years
1520 years
20+ years
4
3
10
9
10
12
52
Total
100
Total company
annual sales
Percentage
Type of industry
Percentage
<$250 million
$250 million$500 million
$500 million$1 billion
$1$2 billion
$2$3 billion
$3$5 billion
$5$9 billion
>$9 billion
18
12
10
17
13
10
8
12
Energy/Chemical/Mining
Communications/Media/Entertainment
Retail
Manufacturing-General
Manufacturing-Consumer products
Manufacturing-Aerospace/defense
Manufacturing-High technology
Energy/Chemical/Mining
Financial services/Insurance
Life sciences-Pharmaceuticals
Life sciences-Medical devices
Health managed care
Transportation service provider
Other
2
3
18
19
15
4
4
1
2
3
3
2
8
16
100
100
101
Analysis of scale measurement reliability and construct validity

Reliability was assessed using Cronbachs Coefcient Alpha,
with a rule that an alpha above .70 indicates good correlation
between the item and the true scores, and lower alpha levels suggest that the sample of items is a poor indicator of the construct
(Churchill 1979). Also, because coefcient alpha tends to underestimate scale reliability and has several limitations, the guidelines suggested by Garver and Mentzer (1999) were followed as
well. If the construct reliability measure is greater than .70 and
the variance extracted is .50 or greater, then the support for reliability is adequate. Results in Table 3 indicate that for all dimensions coefcient alpha and construct reliability exceed the
recommended value of .70; however, the variance extracted for
the dimensions of accessibility and exibility were at .487 and
.475, respectively.
Construct validity was examined through the adequacy of the

models t and both convergent validity and discriminant validity. Evaluating the overall model t using the CFA technique is
the rst step in assessing construct validity. Goodness-of-t criteria examine how well the data t the proposed model. A model
is considered to be satisfactory if the comparative t index (CFI)
is greater than .90, the goodness-of-t index (GFI) is greater than
.90, and the root mean square error of approximation (RMSEA)
is less than .08 (Byrne 1998). Results indicate that the measurement model has a satisfactory t with a chi-square of 1,941.194
and 400 degrees of freedom, CFI = .886, RMSEA = .077, and
GFI = .803.
Convergent validity was judged by assessing the overall t of
the measurement model, the magnitude, direction, and statistical
signicance of the estimated parameters between the latent variables and their indicators, with .70 being the value of substantial
Table 3: Reliability and convergent validity results
Scale/Item
Alertness
A1
A2
A3
A4
A5
A6
Accessibility
B1
B2
B3
B4
B5
B6
B7
Decisiveness
C1
C2
C3
C4
C5
C6
Flexibility
E1
E2
E3
E4
E5
E6
Swiftness
D1
D2
D3
D4
D5
Cronbach Alpha
for scale
Alpha if item
deleted
Item-to-total
correlation
Mean
SD
Item
loadings
Average variance
extracted
.899
.881
.883
.878
.880
.879
.885
.898
.725
.714
.745
.729
.739
.701
3.23
2.97
3.13
3.04
3.13
3.26
1.236
1.169
1.262
1.234
1.276
1.237
.761
.781
.791
.799
.773
.726
.509
.868
.851
.843
.847
.843
.853
.847
.860
.868
.625
.695
.658
.691
.619
.660
.561
2.95
2.91
3.15
2.90
3.19
2.89
2.83
1.168
1.142
1.346
1.176
1.358
1.176
1.272
.751
.785
.657
.780
.644
.668
.577
.487
.868
.851
.850
.846
.863
.870
.865
.880
.725
.729
.753
.654
.612
.639
2.87
2.96
2.94
2.85
2.76
3.06
1.168
1.208
1.191
1.219
1.223
1.185
.786
.785
.805
.674
.665
.732
.552
.841
.808
.802
.818
.832
.810
.820
.843
.654
.689
.606
.635
.647
.591
2.93
2.85
2.71
3.21
2.59
2.78
1.273
1.210
1.291
1.310
1.164
1.236
.687
.772
.686
.637
.681
.665
.475
.882
.861
.850
.861
.852
.860
.882
.700
.570
.522
.545
.509
3.08
3.13
3.23
3.03
2.95
1.276
1.310
1.274
1.331
1.244
.780
.788
.716
.790
.791
.598
Note: CR, construct reliability.
CR
102
D. M. Gligor et al.
magnitude of the parameter estimate (Garver and Mentzer 1999).

Results in Table 3 suggest that convergent validity is satisfactory. Convergent validity can further be assessed in terms of the
degree to which the subscales are correlated. As shown in
Table 4, the correlations between the dimensions are signicantly
different from zero (p < .05). This suggests that the ve dimensions are all measuring some aspect of the same construct.
Discriminant validity was rst assessed using the average variance extracted method (Fornell and Larcker 1981). The variance
extracted measures for the ve dimensions (alertness, accessibility, decisiveness, swiftness, and exibility) were .509, .488, .552,
.598, and .475, respectively. A check was performed to determine whether the average variance extracted for each pair of
constructs was greater than their squared correlation. As Table 4
indicates, the dimensions are highly correlated, ranging from
.868 to .994. Therefore, this test did not provide evidence of discriminant validity. Discriminant validity was further assessed by
running a series of nested CFA model comparisons in which the
covariance between each pair of constructs (one pair at a time)
was constrained to one (Anderson and Gerbing 1982; Bagozzi
and Yi 1988). If the chi-square difference test is signicant when
all of the correlations between the constructs are xed to one for
the theoretical model, and for the measurement model allowing
the two constructs to correlate freely, then the constructs are
deemed to discriminate adequately. Table 5 indicates that all
constructs passed this test; however, this test was not considered
sufcient to establish discriminant validity given the correlations
among the constructs.
Due to a lack of satisfactory discriminant validity, the measurement items for each of the proposed dimensions were further
rened using theoretical considerations. Specically, each dimension was examined for nomological validity, which is a qualitative assessment of the tightness of the theory building and the
denition of each construct (Bagozzi 1980; Mentzer and Flint
1997). To this end, a panel of ve academic experts examined
the denition of each construct and compared it to its assigned
measurement items as a post hoc test to identify items that did
most precisely t the denition. Following this process, 14 of the
30 items for rm supply chain agility (FSCA) were retained. The
nal measurement items are presented in Appendix A, whereas
the items selected for the elimination are presented in Appendix B. The model featuring the remaining items for the ve
dimensions of FSCA was then subjected to the discriminant
validity procedures described above. The results of these tests
continued to provide inadequate evidence of discriminant validity
among the ve dimensions. Therefore, the data provided insufcient evidence to model FSCA as a second-order construct
reecting ve independent dimensions. As the ve constructs
emerged as dimensions of FSCA, but not distinct from each

other, FSCA was determined to be a rst-order reective construct tapping ve domains of agility.
Final model results
Results of analysis of the measurement model portraying FCSA
as a rst-order construct indicate adequate t with a chi-square
of 481.102 and 77 degrees of freedom, CFI = .930,
RMSEA = .090, and GFI = .897. Although it cannot be inferred
that the ve proposed FSCA dimensions are distinct from each
other, the results suggest that in aggregate, the ve concepts
identied in the research represent domains of FSCA. The identication of the ve dimensions of a rms supply chain agility
enables the development of a comprehensive denition as follows: A rms supply chain agility is manifested through the
rms cognitive and physical capabilities that enable the rm to
quickly detect changes, opportunities, and threats (alertness),
access relevant data (accessibility), make resolute decisions on
how to act (decisiveness), quickly implement decisions (swiftness), and modify its range of supply chain tactics and operations to the extent needed to implement the rms strategy
(exibility).
RESULTS DISCUSSION
This research contributes to theory building by addressing
the ambiguity surrounding the dimensions and denition of rm
supply chain agility. It expands on Li et al. (2009) and Braunscheidel and Sureshs (2009) work by fully exploring the
constructs multidimensionality. Alertness, accessibility, decisiveness, swiftness, and exibility were examined as potential rm
supply chain agility dimensions. Although the multidisciplinary
literature reviewed indicated these constructs as potential dimensions of FSCA, the results of this research did not provide sufcient evidence to consider alertness, accessibility, decisiveness,
swiftness, and exibility as distinct dimensions of FSCA. The
nal measurement model displayed adequate convergent validity
indicating that the suggested dimensions do capture the variance
in the FSCA construct. However, the lack of satisfactory evidence
of discriminant validity indicates that while these are indeed
dimensions of FSCA, they might not be distinct from one another.
One plausible explanation of the lack of discriminant validity
among the ve FSCA dimensions can be found in the newly
developed measurement items. Measurement items for four of
the ve dimensions used statements addressing the rms
response to changes, opportunities, and threats. For example, one
item intended to measure alertness states We can quickly detect
Table 4: Correlations table
Alertness
Accessibility
Decisiveness
Swiftness
Flexibility
Alertness
Accessibility
1
.920
.941
.985
.868
1
.922
.914
.920
Decisiveness
Swiftness
Flexibility
1
.911
1
.994
.923
103
Table 5: Chi-square difference test to assess discriminant

validity
Accessibility Decisiveness Swiftness Flexibility
Alertness
(v2diff)
Accessibility
(v2diff)
Decisiveness
(v2diff)
Swiftness
(v2diff)
128.489
68.069
41.861
150.759
103.763
120.099
67.401
25.03
80.68
129.996
Managers can use the comprehensive list of dimensions examined in this research to determine what aspects of their operations
and tactics should be improved to enhance the rms supply
chain agility. By evaluating their organizations approaches to the
ve dimensions of supply chain agility, managers can identify
aspects of supply chain management that need to be addressed to
increase the rms supply chain agility. For instance, it could be
the case than an organization excels at quickly identifying
changes in its environment (i.e., alertness), but has suboptimal
decision-making processes, which prevents it from making resolute decisions (i.e., decisiveness). Once managers identify weaknesses associated with either one of the ve dimensions,
corrective actions can be taken to reduce or eliminate these vulnerabilities, and increase the rms level of supply chain agility.
Notes: p < .001; dfdiff = 4.
changes in our environment, whereas another used to measure

accessibility reads My company can access the information it
needs to deal with changes in its environment. In this example,
the use of the word changes in both statements could have
caused the high inter-item correlation, and therefore constitute a
possible explanation of the lack of satisfactory discriminant
validity among the suggested dimensions.
It can be concluded that future research is needed to further
examine whether alertness, accessibility, decisiveness, swiftness,
and exibility are indeed distinct from one another. Identication
of the 14 elements of FSCA did enable the development of a comprehensive denition to help address denitional inconsistencies
associated with the construct and provide guidance for further theoretical testing of the concept. This is an important contribution as
denitional ambiguities surrounding a concept pose a threat to its
usefulness as a theoretical construct (Luthar et al. 2000). Another
key contribution is the development of a comprehensive FSCA
measurement instrument tapping the ve dimensions.
Prior research has used the terms agility and exibility interchangeably (Giachetti et al. 2003; Li et al. 2008; Almahamid
et al. 2010), which makes theory building problematic. The confusion was in part generated by the fact that both terms were
introduced as a means for organizations to deal with changes.
Consistent with the literature reviewed in the previous sections,
this research suggests that the two terms are distinct concepts,
with exibility being a dimension of agility. This differentiation
was needed to gain a deeper understanding of agility and how the
concept can be positioned against the backdrop of research
addressing related business phenomena. For managers, the distinction illustrates the specic role each construct (i.e., agility and
exibility) has in assisting organizations to deal with changes.
Based on the sports and life sciences literature, this research
posits that rm supply chain agility dimensions can be classied
into two categories: cognitive and physical. The cognitive dimensions (alertness, accessibility, decisiveness) are related to information-processing, whereas the physical dimensions (swiftness,
exibility) are related to action-taking. For managers, the ndings offer a clear distinction between the two types of capabilities that a rm must possess to achieve the desired supply chain
agility level. Too often, the focus of managerial attention is on
physical attributes of business initiatives at the expense of cognitive and behavioral dimensions.
LIMITATIONS AND FUTURE RESEARCH

Limitations inherent to any single article can be addressed
through future research. One plausible explanation of the lack of
discriminant validity among the ve FSCA dimensions could be
due to the use of measurement items addressing the rms
response to changes, opportunities, and threats for four of the
ve dimensions. Future research could help establish if eliminating those items from some of the dimensions would lead to the
development of a ve-dimensional measurement instrument with
adequate discriminant validity. To establish statistical generalizability, the research presented in this article needs to be replicated with new samples from the population. A study can only
address statistical generalizability by not drawing conclusions
beyond the scope of its sample (Mentzer and Flint 1997). While
this research sought generalizability across multiple industries,
future research could focus on single industries.
The measurement instrument developed in this research
should be tested in a nomological model of antecedents and outcomes, for instance, one examining strategic-level FSCA antecedents and performance-related outcomes. This would further
validate the current research and increase the degree of condence in the scales validity and reliability. Last, as is the case
with most supply chain survey research, the constructs of interest
were evaluated based on the perception of a single party
involved in a specic supply chain. Future research using multiple dyads or triads within various supply chains could address
this limitation.
APPENDIX A
FINAL SCALE ITEMS
Firm Supply Chain Agility: Alertness
A2 Our rm can promptly identify opportunities in its
environment. (Adapted from Li et al. 2009)
A3 My organization can rapidly sense threats in its environment.
(Adapted from Li et al. 2009)
Continued.
104
D. M. Gligor et al.
A4 We can quickly detect changes in our environment. (Adapted

from Li et al. 2009)
Firm Supply Chain Agility: Accessibility
B3 We always receive the information we demand from our
suppliers. (Newly Developed)
B5 We always obtain the information we request from our
customers. (Newly Developed)
Firm Supply Chain Agility: Decisiveness
C1 We can make denite decisions to address opportunities in
our environment. (Newly Developed)
C2 My organization can make rm decisions to respond to
threats in its environment. (Newly Developed)
C3 My company can make resolute decisions to deal with
changes in its environment. (Newly Developed)
Firm Supply Chain Agility: Swiftness
D1 We can swiftly deal with threats in our environment.
(Newly Developed)
D4 My rm can quickly respond to changes in the business
environment. (Newly Developed)
D5 We can rapidly address opportunities in our environment.
(Newly Developed)
Firm Supply Chain Agility: Flexibility
E1 When needed, we can adjust our supply chain operations to
the extent necessary to execute our decisions. (Newly
Developed)
E2 My rm can increase its short-term capacity as needed.
(Adapted from Tachizawa and Gimenez 2010)
E3 We can adjust the specication of orders as requested by
our customers.
APPENDIX B
DELETED SCALE ITEMS
Firm Supply Chain Agility: Alertness
A1 We can notice changes in our environment quicker than our
main competitors. (Newly Developed)
A5 As compared with its main competitors, my company is
faster to discover opportunities in its environment. (Newly
Developed)
A6 My company spots threats in its environment more rapidly
than its main competitors. (Newly Developed)
Firm Supply Chain Agility: Accessibility
B1 My rm can acquire the information it needs to respond to
threats in its environment. (Newly Developed)
B2 We can obtain the information we need to address
opportunities in our environment. (Newly Developed)
B4 My company can access the information it needs to deal
with changes in its environment. (Newly Developed)
B6 Our suppliers communicate relevant information to us.
(Newly Developed)
B7 Our customers share pertinent information with us. (Newly
Developed)
Continued.
Firm Supply Chain Agility: Decisiveness

C4 Our supply chain managers are empowered to make
decisions within their area of expertise. (Newly Developed)
C5 In our rm, we have processes in place to facilitate decision
making. (Newly Developed)
C6 As compared with our competitors, my company is more
resolute at making decisions regarding supply chain
operations. (Newly Developed)
Firm Supply Chain Agility: Swiftness
D2 As compared with our competitors, my company is quicker
at executing supply chain operations. (Newly Developed)
D3 My company implements supply chain changes/decisions
faster than its main competitors. (Newly Developed)
Firm Supply Chain Agility: Flexibility
E4 We have a wider range of adjustments that we can make to
our supply chain operations than our competitors. (Newly
Developed)
E5 My company can usually meet an increase in order-size.
E6 Our rm can adjust/expedite its delivery lead times.
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D. M. Gligor et al.
SHORT BIOGRAPHIES
David M. Gligor (PhD University of Tennessee) is an Assistant Professor in the Department of Marketing and Supply Chain
Management at the University of Missouri-Kansas City. David
has published in journals such as the Journal of Business Logistics, Journal of Supply Chain Management, the International
Journal of Logistics Management, Supply Chain Management:
An International Journal, Maritime Economics and Logistics,
and Journal of Transportation Management. Prior to academia,
David spent several years in industry working for major corporations such as General Electric, Ryder Integrated Logistics, and
Hapag-Lloyd.
Mary C. Holcomb (PhD University of Tennessee) is an Associate Professor of Supply Chain Management at the University
of Tennessee. Prior to academia, her professional career involved
some 18 years at the Oak Ridge National Laboratory in transportation research and policy issues for the U.S. Departments of
Energy, Transportation, and Defense. Dr. Holcombs professional
background also includes industry experience with the former
Burlington Northern Railroad, General Motors, and Milliken &
Company. She is a principal researcher in one of the longest running annual studiesLogistics and Transportation Trends and
Issuesthat has been conducted for 21 years. Dr. Holcombs
research has appeared in the Journal of Business Logistics,
Transportation Journal, the International Journal of Logistics
Management, Supply Chain Management: An International Journal, International Journal of Physical Distribution and Logistics
Management, and Supply Chain Management Review.
Theodore P. Stank (PhD University of Georgia) is the Harry
and Vivienne Bruce Chair of Business Excellence and Professor
of Logistics and SCM in the College of Business Administration
at the University of Tennessee at Knoxville. His research focuses
on the strategic implications and performance benets associated
with logistics and supply chain management best practices. He is
author of over 90 articles in academic and professional journals
including Journal of Business Logistics, Journal of Operations
Management, Management Science, Supply Chain Management
Review, and Journal of the Academy of Marketing Science. He is
also co-author of the book 21st Century Logistics: Making Supply Chain Integration a Reality and co-editor of Handbook of
Global Supply Chain Management.

Measurement and Moderation: Finding the Boundary Conditions

in Logistics and Supply Chain Research
Thomas J. Goldsby1, A. Michael Knemeyer1, Jason W. Miller1, and Carl Marcus Wallenburg2
1
2
The Ohio State University

Khne Institute for Logistics Management, WHU Otto Beisheim School of Management
moderator is any variable that affects the strength of a relationship between a predictor and an outcome variable. While simple in concept,
the application of moderation analysis can yield profound implications to research conducted in logistics and supply chain management.
Moderation analysis illuminates boundary conditions to purported relationships, providing a deeper perspective on what may, to date, represent
generalizable ndings and commonly held beliefs in the eld. Such ndings prove interesting and enrich our theories. Further, moderation relies
on precise measurement of theoretical constructs in order to avoid attenuation of statistical tests and detect interaction effects. This thought leadership piece seeks to: (1) assert the value of moderation analysis and encourage a more prominent place in our survey-based research projects,
(2) provide best practice approaches for using this type of analysis in pursuit of greater depth and clarity in our research, and (3) provide seeds
for potential research projects that could benet from the use of this type of analysis. Guidance is also provided for reviewers who assess manuscripts featuring moderation.
Keywords: moderation analysis; interactions; empirical methods; measurement; boundary conditions
INTRODUCTION
As the logistics and supply chain management (SCM) disciplines
mature, increased emphasis will be placed on establishing the
boundary conditions of our theories through moderation analysis
(Fawcett and Waller 2011). Identifying limits and boundary conditions improves the precision of our theorizing (Edwards and
Berry 2010), increases the validity of our ndings (Leavitt et al.
2010), and helps ensure that we utilize nontautological theories
given that all falsiable theories must have their limits (Popper
1959; Gray and Cooper 2010). Hall and Rosenthal (1991) assert
that if we want to know how well we are doing in the biological, psychological, and social sciences, an index that will serve
us well is how far we have advanced in our understanding of the
moderator variables of our eld (p. 447). Simply stated, the
exclusion of important moderator variables can lead to overgeneralizations that fail to illuminate the boundary conditions under
which purported relationships exist.
In order to leverage moderation analysis effectively, it is critical to understand the connection between moderation and measurement of our theoretical constructs. Moderation and
measurement are tightly intertwined in that (a) measurement error
can result in extreme attenuation of statistical tests for moderation when regression approaches are used (Aiken and West
1991) and (b) common method variance (CMV) severely deates
interaction effects (Siemsen et al. 2010). In addition to illustrating how intimately moderation analysis is linked with measurement, the objectives of this article are: (1) to assert the value of
moderation analysis and encourage a more prominent place in
our disciplines survey-based research projects, (2) to provide
best practice approaches for using this type of analysis in pursuit
of greater depth and clarity in our research, and (3) to provide

some seeds for potential research projects that could benet from
the use of this type of analysis.
MODERATION 101
A moderator is any variable that affects the strength of a relationship between a predictor and an outcome variable. Imagine
one is looking at how a certain logistics practice inuences rm
performance. In many instances, it is likely that extant theory
provides a logical rationale for why at least one variable, such as
the level of industry competition or characteristics of the products being sold, should affect the strength and/or direction of the
relationship between the focal logistics practice and rm performance. In fact, some moderator variables may even lead to an
observed negative effect of the investigated logistics practices on
performance. Identifying such boundary conditions provides a
deeper perspective of the focal relationship and enriches our theories (Fawcett and Waller 2011), and it helps researchers evaluate the robustness of their results (Maloni and Carter 2006;
Goldsby and Autry 2011). As noted by Leavitt et al. (2010) by
predicting interaction1 effectsour condence in a theoryis
bolstered (p. 660). It is this deeper perspective that we, as
researchers, should be striving to provide to our constituents
(Knemeyer and Naylor 2011). Furthermore, moderation analysis
allows researchers to discover unanticipated contingencies
between variables, which can challenge commonly held beliefs,
one example of what Davis (1971) terms interesting research
Thomas J. Goldsby, Department of Marketing and Logistics, Fisher
College of Business, The Ohio State University, Fisher Hall, 2100 Neil
Avenue,Columbus,OH43210,USA;E-mail:goldsby_2@sher.osu.edu
Moderation and interaction can be treated as synonyms

given that theorizing why the moderator variable changes the
strength and/or direction of the focal variables relationship with
the outcome implies that an interaction exists between the focal
predictor and moderator.
110
T. J. Goldsby et al.
that can fundamentally alter how a eld views certain phenomena.

To provide an example, consider the ndings from Cahill
et al. (2010), who examine (1) the effects of three facets of
logistics customer service (service, cost, and relational performance) on customer loyalty in logistics service providercustomer arrangements, and (2) whether the hypothesized
relationships are moderated by conict frequency. Their work
suggests that the effect of these different facets of logistics customer service on customer loyalty is contingent on the conict
frequency. They nd that when conict frequency is low, satisfaction with operational aspects of logistics service is the dominant driver of customer loyalty; when conict frequency is high,
satisfaction with relational aspects of logistics service is the dominant driver of customer loyalty.
Furthermore, while moderation analysis has been used more
often in recent publications, only a few articles position moderation as a central point of attention (e.g., Flynn et al. 2010; Zsidisin and Wagner 2010), even though from a theoretical and
statistical standpoint the moderated effect is the center of attention. Thus, it is necessary not only to make the moderation a
more focal point of argumentation, but also to change how we
have traditionally theorized moderated relationships, consistent
with Edwards and Berrys (2010) call to increase the precision
of theorizing in the organization sciences.
Connecting the theory and the mathematics of moderation
A common practice among social scientists is to hypothesize a
linear effect between a predictor of interest and an outcome variable before introducing the moderatorto theorize why this variable should inuence the strength of the relationship between
the predictor and the outcome. However, such an approach is
inconsistent with the theoretical meaning of moderation and
likely has resulted in many misconceptions about moderation
analysis.
As a basis to understand why such an approach is theoretically
inconsistent, we begin by briey reviewing moderation analysis.
Figure 1 represents a simple two-way moderation model where
variable X is the focal predictor of interest, Y is the outcome variable, and M is the variable expected to moderate the relationship
between X and Y. Including control variables, the conceptual
model can be visually represented as depicted in Figure 1.
Figure 1: Basic moderation model.

Moderator (M)
Focal Predictor (X)
Control Variables
Outcome (Y)
Assuming the control variables, K1Kw, the model would be

represented using the following linear equation adapted from
Hayes and Matthes (2009):
Y i b1 X b2 M b3 XM
Xw
j1
bj Kj e:
In Equation (1), assuming unstandardized coefcients, i represents the regression intercept; b1, called a rst-order effect, represents the change in Y due to a one-unit increase in X when M
equals zero; b2 represents the change in Y due to a one-unit
increase in M when X equals zero; and b3 represents the change
in the slope of X on Y due to a one-unit increase of M or, equivalently, the change in the slope of M on Y due to a one-unit
increase of X (Hayes and Matthes 2009; Hayes et al. 2012).2
Moderation is present when b3 is signicantly different from
zero.
The effect of X on Y, termed simple slope by Aiken and West
and denoted as hX, can be calculated as the rst partial derivative
of Y with respect to X. This is shown in Equation (2)3:
hX
@Y
b1 b3 M:
@X
A key interpretational point from Equation (2) is that when

moderation is modeled via product terms using regression
approaches, the model does notas often believedcontain a
main effect. Rather, b1 captures the conditional effect of X on
Y when M is zero (Irwin and McClelland 2001; Hayes and Matthes 2009).4
When conducting moderation analysis with a categorical moderator using multigroup structural equation modeling (SEM), it is
also best to think in terms of conditional effects. Here, a categorical moderator is utilized to split the data into two (or more)
groups. The key difference is that in multigroup analysis the
interpretation of a moderated relationship becomes in group
one, a one-unit increase in X results in a certain change in Y,
whereas in group two a one-unit increase in X results in a certain
(possibly different) change in Y. Moderation is considered present when the Dv2 test from constraining the structural pathways
to equality between the two groups is signicant compared to a
2
In all cases the control variables are assumed to be held constant.

3
An important assumption to arrive at Equation (2) is that X
has not been previously transformed by a nonlinear function, as
is often done with sales and revenue data through logarithmic
transformations. See Hayes and Preacher (2010) for several
examples and interpretational challenges due to the added complexity of the partial derivative.
4
It should be noted that this is distinct from the analysis of
variance (ANOVA) framework, where main effects are present
because the independent variables are treated as orthogonal.
However, it should be noted that while there are main effects in
ANOVA, when a signicant interaction is found it is recommended that simple effects of one factor at a xed level of the
second factor be tested (Keppel and Wickens 2004), which is
equivalent to testing the signicance of the conditional effect of
X on Y at a given level of M, as captured in Equation (2).
Measurement and Moderation
model where the structural pathways are freely estimated5 (Byrne

2009).
CONDUCTING MODERATION: FROM THEORY TO
EXECUTION
Given the importance that moderation analysis has playedand
will increasingly playin advancing research, we summarize a
state-of-the-art method for conducting moderation analysis from
theorizing to testing and interpreting results. This guidance is
presented in Table 1 and explained in sequence below. For the
sake of simplicity and illustration purposes, this discussion
assumes the study of one moderating variable at a time. Threeway interactions, which denote that the conditional effect of X at
a specied value of M changes depending on the level of a third
moderator (Z), require more complex analytical and theoretical
treatment than the effects discussed here (Aiken and West 1991).
Similarly, we do not examine scenarios with curvilinear and
interaction effects, but focus on most commonly observed interpretational and reporting challenges that have been noted in the
literature (Irwin and McClelland 2001; Hayes et al. 2012). More
details about these recommendations can also be found in Aguinis and Gottfredsons (2010) primer on moderated multiple
regression for testing moderation.
Theorizing moderated relationships
In Equation (2), the presence of moderation means that the
slope of X on Y is conditional on the value of M. As such, the
procedure of rst theorizing a linear effect of X on Y and only
thereafter theorizing an interaction effect is inconsistent with
ones initial expectations because the researcher ultimately
expects that the effect of X on Y is conditional on M. In other
words, how can something be constant but then vary based
on the level of another variable? Rather, the researcher should
utilize theory and past empirical ndings to sketch logical arguments for the sign of the interaction effect (b3). Once the
researcher has done this, contingent hypotheses such as theorizing that X will have a positive impact on Y when M is low but
have a negative impact on Y when M is high may be developed.6 This is consistent with both Bagozzi (2011), who notes
that theoretical rationales should be expressed contingently, and
Edwards and Berrys (2010) call for the development of contingent predictions to increase the precision of theorizing in the
organization sciences.
111
Data collection: the importance of highly reliable measures

As outlined at the start of this piece, moderation analysis and
measurement are intimately linked. Standard moderation analysis
conducted using multiplicative regression approaches does not
account for attenuation due to measurement error of the predictor
and of the moderator. This link can be explicitly seen in Equation (3)7 from Busemeyer and Jones (1983).8
qXM;XM
Assuming two groups, an equivalent test would be to conduct

a Z-test to determine whether the difference between freely estimated structural pathways in both groups was different from zero
using formulas from Cohen et al. (2003). With one moderated
pathway, these tests are equivalent and the analyst would nd
that if the value from the Z-test was squared, this would equal
the value for the v2 test with df = 1.
6
We wish to stress that developing contingent hypotheses is
not required; the important hypothesis is the direction of the
interaction effect (i.e., positive or negative).
In Equation (3) if the correlation between X and M is zero,

the reliability of XM is the product of the reliabilities of X and
M, and as the correlation between X and M increases, the reliability of XM approaches the reliability of the constituent terms.
In Table 2, we illustrate the reliability of the product term of X
and M given varying levels of qXM, qXX, and qMM.
Table 2 illustrates an important challenge that researchers face
when undertaking moderation analysis in the presence of measurement error. In most realistic situations, the reliability of the
product term is severely attenuated, which greatly reduces the
probability that the researcher will detect a statistically signicant
interaction effect (Aiken and West 1991). It should be noted that
the degree of attenuation is not linear and is more severe when X
and M have lower reliabilities. For example, assuming uncorrelated X and M and each having a reliability of 0.70, then the reliability of XM is 30% lower (0.49), but when X and M have a
reliability of 0.90, then the reliability of XM is only 10% less
(0.81). Given that interaction effects in nonexperimental research
often only have small effect sizes (Cohen 1988), researchers benet from the use of highly reliable scales to help minimize any
further attenuation.
Conducting the analysis
Dalal and Zickar (2012) note that one of the most persistent
urban legends about moderation analysis concerns mean-centering or standardization of the focal predictor and moderator
before calculating the product term. Mean-centering or standardization is not necessary as analytically demonstrated by Echambadi and Hess (2007) and does not impact the statistical power to
detect interaction effects (Hayes and Matthes 2009; Dalal and
Zickar 2012). It is also essential to include the constituent (rstorder) terms that form the product term in the model for statistical reasons discussed in detail by Aiken and West (1991) and
Irwin and McClelland (2001).9
7
q2XM qXX qMM

:
q2XM 1
qXM,XM is the reliability of the product of X and M; qXM is

the correlation between X and M, qXX is the reliability of X; and
qMM is the reliability of M.
8
This equation is based on the assumption of bivariate normality and of the means of X and M to be zero.
9
Additional standard assumptions such as (1) residuals following a normal distribution, (2) homoskedasticity of the residuals,
(3) no correlation between the exogenous variables and the residuals due to omitted variables, and (4) independence of the residuals should also be met for conducting the analysis (Cohen et al.
2003).
112
Table 1: Guidance for conducting moderation analysis
Analytical techniques
OLS regression
Logistics regression
Hierarchical linear model
Nonlinear structural equation modeling
Multigroup structural equation modeling
Type of moderator
Nominal categorical, ordered categorical, interval, or ratio
Nominal categorical, ordered categorical,

may not be interval or ratio
Theorizing
moderation hypotheses
Do not theorize main effects then the interaction; rather,

utilize theory to develop a hypothesis for the interaction
effect to provide a theoretical explanation for why the
strength and/or direction of X to Y should change
If developing hypotheses for the effect of the focal
predictor at different levels of the moderator
(i.e., positive when M is high, negative when M is low),
be sure to state these hypotheses as conditional effects
Do not theorize main effects then

the interaction; rather, utilize
theory to develop a hypothesis
for the interaction effect to provide
a theoretical explanation for why
the strength and/or direction of
X to Y should change
If developing hypotheses for the
effect of the focal predictor at
different levels of the moderator
(i.e., positive for group one but
negative for group two), be sure to state
these hypotheses as conditional effects
Testing
moderation hypotheses
Describe any data transformations prior to forming the

interaction terms if X and/or M are interval or ratio
Unstandardized X and M with no mean centering
Unstandardized X and M with mean centering
Standardized X and M
Utilize the step-down approach of including scale
invariant interaction term; if the scale invariant term
is not signicant, remove from model and rerun analysis
Moderation is present if interaction effect is signicant.
First establish congural and metric

invariance using multigroup analysis
Utilize DCFI, DRMSEA, and DSRMR
guidelines developed by Chen (2007) to
establish congural and metric invariance
Test moderation hypotheses using Dv2 test
comparing the t of the model with the
focal predictor freely estimated and
constrained to equality across the groups
Moderation present if signicant Dv2
when comparing the t of the model
with the equality constraint of the focal
predictor
Interpretation and
presentation of results
(assuming the interaction
is signicant)
Report unstandardized coefcients

If X and M were standardized before forming the
product term, the unstandardized coefcients will
represent a standardized effect
If the moderator is dichotomous, plot the predicted
value of the outcome variable across the
range of X at both levels of M
If the moderator is continuous, develop a
JohnsonNeyman plot illustrating the region of
signicance for the simple slope
Report unstandardized coefcients

Reporting standardized coefcients
requires demonstrating that variances
of the latent variables are invariant before
comparing standardized coefcients
across groups has meaning
Plotting the interaction effect is unnecessary
If conducting multigroup SEM, a researcher completes the test

of a signicant interaction via a v2 test for the multigroup
model with the hypothesized moderated pathway freely estimated
and constrained across the groups. Prior to conducting this test,
the researcher should establish congural and factorial invariance
(Vandenberg and Lance 2000). Briey, congural invariance
refers to establishing that the same pattern of xed and free loadings that approximately recreate the covariance matrixes for both
groups, whereas factorial invariance (also termed weak metric
invariance) refers to establishing that the factor loadings operate

similarly across the groups (Marsh et al. 2009). We suggest
using Chens (2007) guidelines for changes in comparative t
index (CFI), root mean square error of approximation (RMSEA),
and standardized root mean square residual (SRMR), an
approach also advocated by Byrne (2009) and Marsh et al.
(2009) to establish congural and factorial invariance. Importantly, as noted by Newsom et al. (2003), researchers should not
conclude that moderation is present just because the structural
113
Table 2: Calculations of the reliabilities of the product term XM

contingent on the reliabilities of X and M when qXM is 0 (panel
A), 0.25 (panel B), and 0.50 (panel C)
Reliability of M
Panel A: qXM = 0
Reliability of X
0.6
0.7
0.8
0.9
Panel B: qXM = 0.25

Reliability of X
0.6
0.7
0.8
0.9
Panel C: qXM = 0.50
Reliability of X
0.6
0.7
0.8
0.9
0.6
0.7
0.8
0.9
0.36
0.42
0.48
0.54
0.42
0.49
0.56
0.63
0.48
0.56
0.64
0.72
0.54
0.63
0.72
0.81
0.40
0.45
0.51
0.57
0.45
0.52
0.59
0.65
0.51
0.59
0.66
0.74
0.57
0.65
0.74
0.82
0.49
0.54
0.58
0.63
0.54
0.59
0.65
0.70
0.58
0.65
0.71
0.78
0.63
0.70
0.78
0.85
pathway is signicant in one group and not signicant in

another.
Reporting results
When testing interactions between variables in the form of
product terms, researchers must report the scales of X, M, and
XM (i.e., raw or standardized), as this impacts the interpretation
of the coefcients (Hayes and Matthes 2009; Dalal and Zickar
2012). If XM is created using raw or mean-centered data in the
original unit metric, then standardized effects should not be
reported because they lack an interpretable statistical meaning10
(Aiken and West 1991). To aid in understanding the interaction,
we encourage the reporting of interaction plots consistent with
Aiken and West (1991). When the moderator is a dichotomous
variable, we recommend plotting the predicted values of the dependent variable across the range of the focal predictor at the two values of the moderator. When the moderator is a continuous
variable, we recommend developing a JohnsonNeyman graph of
the region of signicance for the simple slope of the focal predictor
across the range of the moderator (Bauer and Curran 2005). Such
plots can easily be created using online tools available from
Preacher et al. (2006), or using macros developed by Hayes and
Matthes (2009).11 We prefer the JohnsonNeyman technique when
the moderator is continuous because (1) exact values for when the
10
Standardized effects are calculated by multiplying an

unstandardized effect by the ratio of the standard deviation of
the predictor over the standard deviation of the dependent variable. This is problematic in the context of moderation analysis
because it ruins the interpretation of the coefcients as interpreted in Equation (1).
11
Excel-based tools are also available from the third author
upon request.
simple slope of the focal predictor differs from zero are calculated,
and (2) the range of the condence bands for the simple slope indicates the precision of its point estimate (Bauer and Curran 2005;
Miller et al. 2013).
In conducting multigroup analysis, plotting the interaction
effect is not necessary given the interpretability of the structural
coefcients across groups. However, it is important that unstandardized effects be reported for multigroup analysis. For example, imagine that in groups one and two the standardized effect
of X?Y is 0.25, but in group one the standard deviation of X is
2 units and the standard deviation of Y is 4 units, while in group
two the values are 2 and 2, respectively. In such a scenario, the
unstandardized effect in group one is 0.50, and the unstandardized effect in group two is only 0.25. Kim and Mueller (1976)
and Newsom et al. (2003) provide a discussion of this issue in
greater detail, but this simple numerical example demonstrates
that reporting standardized coefcients when the variances of X
and Y are different across levels of M can be problematic.
Given the complexity of moderation analysis and the potential
unfamiliarity of reviewers with how to evaluate such analyses,
we provide a set of guidelines in Table 3 helpful for reviewers
who assess manuscripts featuring moderation. Here, too, we
assume that a single moderator is present in each hypothesized
relationship.
Additional benets of moderation analysis
In the measurement domain, identifying signicant interaction
effects provides evidence that a researcher likely suffers from
minimal contamination due to CMV given that CMV can only
attenuate interaction effects (Evans 1985; Siemsen et al. 2010).
Simulation research by Evans (1985) and subsequent analytical
analysis by Siemsen et al. (2010) nd that CMV stemming from
a single unmeasured method factor cannot inate the parameter
estimate of an interaction. Rather, CMV can heavily deate these
estimates, and Siemsen et al. (2010) note that under realistic conditions deation of 255% could be expected. Two implications
stem from these ndings. First, researchers must be cognizant of
the deation of interaction terms from CMV and design their
surveys following guidelines proposed by Podsakoff et al. (2003)
and Rindeisch et al. (2008) in order to minimize these concerns
for deation. Second, given that simulation studies by Richardson et al. (2009) and Chin et al. (2012) recommend that common
approaches for testing for CMV, particularly the use of an
unmeasured, uncorrelated latent method factor, be discontinued,
moderation analysis may represent one of the best, albeit indirect, approaches to evaluate concerns about CMV biasing
ndings.
PUTTING MODERATION TO WORK
To provide direction for future research utilizing moderation
analysis, we provide several examples of commonly researched
relationships in logistics and SCM in Table 4. Here, we introduce
a theoretically motivated moderating variable for the relationship
and an explanation of the prospective benet for testing such an
effect. By these means, the researcher can explore the boundary
conditions of established knowledge.
114
Table 3: Guidance for reviewers

Stage
Theorizing
Testing
Interpretation and presentation
Questions to ask
Have the authors developed a logically consistent series of arguments predicting the sign of the
interaction effect (i.e., positive or negative)?
Have hypotheses predicting the effect of X on Y been developed as conditional effects given
the authors have theorized an interaction?
Have the authors reported whether X, M, and XM are in their raw unit score, mean-centered unit score,
or standardized scores?
Have the authors included all constituent (lower-order) terms necessary for testing the interaction?
If conducting multigroup SEM analysis, have the authors established congural and factorial invariance
prior to testing the invariance of the structural pathway?
Have the authors reported unstandardized effects, as standardized effects should not be reported
since these lack interpretational meaning?
Have the authors interpreted the results properly, such as avoiding statements of main effects?
Have the authors provided a visual representation of the interaction, especially when using product
terms, to aid the audience in interpreting the interaction?
Table 4: Prospective moderation analysis in logistics and supply chain management

Focal Predictor
Outcome variable
Potential new moderator
Benets from empirical testing

Identify if a threshold effect exists,
whereby a minimum level of satisfaction
is needed to maintain the level of loyalty
Examine if trust plays a more powerful
role in inuencing commitment when it
is more difcult for a customer to
monitor a suppliers outcomes and procedures
Examine if the effectiveness of using
information technology is contingent
upon different information processing
requirements (i.e., highly equivocal information)
Identify if customers with different demand
patterns place more (or less) emphasis on
various dimensions of logistics customer service
Better examine if plateau effects occur
whereby additional integration returns
no performance gains or, potentially,
diminishes performance
Determine the thresholds under which
transaction-specic investments inuence
relationship outcomes, like satisfaction,
switching behavior, extensions, and referrals
Customer satisfaction
Customer loyalty
Customer
satisfaction (curvilinear)
Trust
Commitment
Behavioral uncertainty
Information technology
usage for exploitation
Collaboration
Environmental
dynamism
Logistics customer service
Customer satisfaction
Demand uncertainty
Supplier integration
Performance
Supplier integration
(curvilinear)
Supply chain collaboration
Relationship outcomes
Transaction-specic
investments
It should be noted in Table 4 that two proposed relationships

are expected to be quadratic effects, which can be thought of as
a situation where the focal predictor moderates its own relationship with the outcome variable because the impact of an increase
of the focal predictor on the outcome is contingent on the current
value of the focal predictor (Aiken and West 1991; Hayes and
Preacher 2010). For example, adopting the lens of expectationdisconrmation (Oliver 1980; Mittal et al. 1998), one would
expect that the relationship between customer satisfaction and
customer loyalty would exhibit a negative quadratic relationship.

If customer satisfaction was low, then an increase in customer
satisfaction would be expected to result in a substantial increase
in customer loyalty (implying a positive simple slope). However,
once customer satisfaction crosses a given threshold, one would
expect that the same increase in customer satisfaction would
have minimal impact on improving customer loyalty. Guidance
for interpretation of these relationships is found in Kelava et al.
(2011) and Hayes et al. (2012).
FINAL THOUGHTS
As the logistics and SCM disciplines mature, moderation analysis will become an increasingly important analytical approach to
establish the boundary conditions of our theories. Developing
and testing moderated relationships will increase the precision
of our theorizing (Edwards and Berry 2010) and allow us to
make more informed recommendations to our practitioner audience. Furthermore, establishing boundary conditions to our theories will allow us to begin to prune the increasingly dense
theoretical landscape in the best tradition of Platts (1964) call
for strong inference by focusing our research efforts on theories
that prove robust to falsication (Leavitt et al. 2010). However,
conducting such analyses requires researchers to develop highly
reliable measurement instruments and data collection protocols
that will minimize the concern of CMV given that both measurement-related issues can severely attenuate these effects. It is
our hope that this thought piece will help clarify any misconceptions concerning moderation analysis and provide researchers
in our disciplines with guidance for testing these effects in the
hopes of nding interesting results (Davis 1971).
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SHORT BIOGRAPHIES
Thomas J. Goldsby (PhD Michigan State University) is Professor of Logistics at the Fisher College of Business, The Ohio
State University. His research interests include logistics customer
service, supply chain integration, and the theory and practice of
lean and agile supply chain strategies. He is co-author of Lean
Six Sigma Logistics: Strategic Development to Operational Success and Global Macrotrends and Their Impacts on Supply
Chain Management. Dr. Goldsby is an Associate Editor of the
Journal of Business Logistics and co-editor-in-chief of Transportation Journal.
A. Michael Knemeyer (PhD University of Maryland at College Park) is an Associate Professor of Logistics at the Fisher
College of Business, The Ohio State University. His research
focuses on the areas of logistics outsourcing and supply chain
relationships. Dr. Knemeyers work has appeared in the Harvard
Business Review, California Management Review, the Journal of
Business Logistics, the International Journal of Logistics Management, Transportation Journal, Journal of Supply Chain Management, and International Journal of Physical Distribution and
Logistics Management.
Jason W. Miller (BSBA John Carroll University) is a PhD
candidate in logistics at The Ohio State University. His research
in logistics and supply chain management focuses on organizational control and factor market rivalry whereas his methodological research focuses on moderation, mediation, and covariance
structure modeling. His work has also been published in Multivariate Behavioral Research.
Carl Marcus Wallenburg (PhD WHU Otto Beisheim
School of Management) is Professor of Logistics and Director of
the K
uhne Institute for Logistics Management, WHU Otto
Beisheim School of Management, Germany. His research covers
a broad eld of logistics and SCM with special focus on performance management, logistics services and 3PL, and different
supply chain matters (e.g., risk management and logistics innovation) and how they are inuenced by vertical and horizontal relationships in the supply chain. Dr. Wallenburg frequently speaks
at conferences and company meetings and has published six
books, 16 management studies, including CSCMPs Global Perspectives on Germany and one Boston Consulting Group Focus
Report, and over 75 articles. He is the European editor of the
Journal of Business Logistics and his research has been awarded
with the German Logistics Award 2004 and two Emerald Outstanding Paper Awards 2011.

Conceptualizations of Trust: Can We Trust Them?

Judith M. Whipple, Stanley E. Grifs, and Patricia J. Daugherty
Michigan State University
lthough logistics and supply chain management research efforts have continued to become more sophisticated, opportunities still exist for
further advancement. One critical area needing improvement is enhanced scale development and validation. This study provides insights
into the strengths and weaknesses of one specic construct, trust, by examining how trust has been measured in our literature. A methodology
for improving scale development, the Q-sort procedure, is used to demonstrate a need for better measurement scales. Our ndings suggest that
numerous measures of trust have been used for logistics and supply chain researchmost of which have been borrowed from other disciplines
without signicant replication. More importantly, the results illustrate that all too often content validity is less than adequate. It appears as
though we are not always measuring what we want to. Greater focus is recommended for future research that examines theory-based scale
development, purication of measures, and replication of scales to further rene and improve construct measurement for enhanced survey
research.
Keywords: Q-sort; scale development; scale validity; trust
INTRODUCTION
Logistics/supply chain management (SCM) research has evolved
signicantly since the rst issue of the Journal of Business
Logistics appeared in 1978. As an example of this evolution,
Georgi et al. (2010) summarize how the intellectual foundation
of the journal has changed since its inception, shifting from
predominantly operationally focused research to more strategicoriented research. Perhaps much of this evolution is a result of,
or was at least partially motivated by, calls from within the
eld for more rigorous theoretical and methodological focus.
For example, Stock (1990, 1996, 2002) calls for the logistics
discipline to broaden its perspectives on logistics and its role
within the corporate landscape by not only delving into research
in nontraditional areas but also including other disciplinary
approaches, such as psychology and organizational behavior, in
our research. In 1994, Dunn et al. discuss the need for greater
scale development and validation in logistics research as the
eld was embarking on research that involved more latent variables. Scale development and validation was critical to move
logistics research from purely descriptive to a more theoretically
driven approach (Dunn et al. 1994). Furthermore, as research in
logistics began focusing on more behavioral approaches, scale
development and validation were considered more critical for
advancing logistics theory (Keller et al. 2002).
Despite such evolution, recent research has indicated that more
work is needed. Sanders and Wagner (2011) propose that multidisciplinary and/or multimethod research can provide greater
insight into todays and tomorrows challenges and opportunities (p. 317). In addition, Goldsby and Autry (2011, 324) suggest despite the acceleration of SCM research, many critical
topics remain understudied, and indicate that research is war-
Judith M. Whipple, Department of Supply Chain Management, The
Eli Broad College of Business, Michigan State University, 632
Bogue Street, East Lansing, MI 48824, USA; E-mail: whipple@bus.
msu.edu
ranted to enhance the theoretical foundations in logistics and

SCM research.
In particular, behavioral-based research offers a critical area
for further study not only in terms of theoretical development
but also with respect to construct denitions, scale development,
and validation. This is particularly important given the rise in
behavioral-based research in the eld. Recent research illustrated
that one of the key emerging themes in logistics research has
been a greater focus on interorganizational relationships (Georgi
et al. 2010). Research examining the intellectual structure of
SCM found interorganizational research to be one of three main
streams of research (Charvet et al. 2008).
Our study focuses specically on evaluating the use of trust as
a key construct in interorganizational research within logistics/
SCM literature. Results of a literature review indicate that
although trust has been examined in a large number of studies,
the construct does not have an accepted denition, and inconsistencies in scale development exist. Trust is a broad term that
encompasses a great deal of complexity and, potentially, misunderstanding. As such, the standard trust scales used in logistics/
SCM research may not be broad enough to truly capture the
essence of such a complex construct. For example, trust may be
conceptualized based on what trust entails (e.g., what the trustor
examines with respect to the trustee), where trust resides (e.g., at
the individual or interorganizational level), and, even, how trust
develops (e.g., longitudinal aspects of trust, including the loss
and potential recovery of trust).
Furthermore, as a eld, we have predominantly relied on other
disciplines for scale development and validation with respect to
trust (e.g., psychology, organizational behavior, marketing) while
often ignoring the potential for content validity issues that may
result from contextual modications. Content validity refers to
the adequacy with which a measure assesses the domain of interest (Hinkin 1995, 968). As such, trust scales that were developed to understand interpersonal trust in the context of a spousal
relationship may not be valid when applied to interpersonal trust
between a buyer and a sales representative. Condence in content validity of a measure does not automatically transfer as a
singular property of that measurerather, content validity should
118
be conrmed whenever existing measures are used in substantially different research settings.
Finally, McEvily and Tortoriello (2011) analyze 171 papers
published in the past 48 years in the organizational literature,
and nd 129 different measures of trustfew of which were
strongly replicated and/or supported through construct validity.
As advocated by Goldsby and Autry (2011), SCM researchers
need to focus on greater validation of concepts. Trust represents
a key area in need of such validation. In fact, a new journal was
recently created, the Journal of Trust Research, with a mission
to open the black box of trust (Li 2011, 2). Logistics and SCM
researchers need to be involved in this ongoing debate and study
of trust given that it has been generally accepted that trust is
imperative to constructive interpersonal, interrm and international interaction and cooperation (Li 2011, 1). We should not
continue to rely on trust denitions and scales from the past and
other disciplines without understanding current developments and
enhancements. That is not to say that these denitions and scales
are wrong, per se; however, as a discipline, we need to ensure
that the scales we use are valid and reliable in our context given
the current knowledge base.
The purpose of this study was to review the various denitions and applications of trust from a multidisciplinary perspective, and to examine, specically within the logistics/SCM
literature, how trust has been operationalized from a measurement perspective. We focused on two specic research questions:
(1) what is the state of scale development with respect to trust to
understand how trust has been measured and used in our discipline? and (2) is there consensus with respect to how trust has
been measured and conceptualized to understand issues of scale
validity? As a result of this review and empirical analysis of trust
measures, we propose a framework for examining trust as well
as a future research agenda that can lead to a more thorough,
valid, and enhanced understanding of trust within the logistics/
SCM eld.
LITERATURE REVIEW
Trust has been examined from various disciplinary perspectives,
and numerous authors have suggested multidisciplinary frameworks to tie the varied perspectives together and/or to organize
and review historic perspectives. Our focus here is not to reinvent the wheel, but rather to highlight the various philosophical
traditions associated with trust as well as the current debates
within and across disciplines concerning trust. As discussed by
Rousseau et al. (1998, 393), disciplines have considered trust
from different perspectives:
Economic perspective: calculative (Williamson 1993) or

institutional (North 1990);
Psychological perspective: attributes of trustors and trustees
and focus upon a host of internal cognitions that personal
attributes yield (Rotter 1967; Tyler 1990; see Deutsch
1962; and
Sociological perspective: trust in socially embedded properties of relationships among people (Granovetter 1985) or
institutions (Zucker 1986).
J. M. Whipple et al.
McEvily (2011) argues that trust has evolved from two dominant paradigms: economics, which emphasizes behavioral measures; and social sciences, which emphasizes attitudinal
measures. Behavioral measures are rooted in economic game
theory and enable risk-based approaches for studying trust,
while attitudinal measures consider trust as a psychological state
(McEvily 2011, 1268). Following this approach, Kramer (1999)
differentiates trust, examined in organizational theory, as being
either a choice behavior (p. 572) or a psychological state (p.
571). As Kramer (1999) concludes, there are two perspectives on
choice behavior: rational choice (e.g., Williamsons 1993 calculative perspective) and relational models of trust (e.g., Granovetters 1985 social embeddedness approach). With respect to
psychological states, various considerations have been examined,
including vulnerability, expectancy, and affective conditions
(Kramer 1999). Li (2007) indicates that, while a majority of trust
researchers adopt a trust as attitude approach, there is growing
interest in the trust as choice approach.
Hosmer (1995, 391) developes the following four categories
of trust based on various research perspectives used, comparing
denitions, illustrating key assumptions, and considering contextual differences: (1) individual expectations (nonrational behavior based upon past experiences and future forecasts); (2)
interpersonal relationships (nonrational behavior, based upon
characteristics and traits of both individuals); (3) economic
exchanges (economically rational behavior, constrained by contracts and controls); and (4) social structures (socially rational
behavior, directed by formal requirements and informal obligations). Hosmer (1995) offers a fth element, ethical principles,
as an important trust consideration.
Hosmers (1995) categorization alludes to trust occurring at
various levels, such as between individuals as well as between
organizations. The level of analysis for studying trust has often
been related to the disciplinary perspective, such that economists
have tended to examine trust at the individual and/or the rm
level, psychologists have focused on the individual and the group
level, and sociologists have examined trust within the group and/
or society (Rousseau et al. 1998). Ganesan and Hess (1997) propose that trust could exist at four levels: interpersonal (i.e., trust
between individuals); organizational (i.e., an individuals trust for
an organization); intraorganizational (i.e., trust between an
employee and employer); and interorganizational (i.e., trust
between organizations).
Specic denitions of trust have developed, in part, from the
perspectives of trust described above. However, researchers still
contend that a widely accepted denition of trust is lacking
(Li 2012, 101). Early denitions of trust considered trust as
either an expectation or a behavioral intention (Moorman et al.
1992). Zucker (1986) offers a denition of trust based on
expectations as indicated: trust is dened as a set of expectations shared by all those involved in the exchange (p. 54).
Expectation approaches indicate that despite uncertainty about
how the other will act, there are positive expectations regarding
the other partys intentions, motivations, and behaviors (Lewicki et al. 2006, 996). Trust as behavioral intention implies a
condence in the other partys motives and, thus, involves risktaking behavior. This behavioral intention entails a willingness
to accept vulnerability to the actions of another party (Lewicki
et al. 2006, 996).
Conceptualizations of Trust
Regardless of the underlying discipline, many authors combine

elements of expectation as well as vulnerability as critical components for dening trust (e.g., Moorman et al. 1992; McEvily
and Tortoriello 2011). Based on various denitions, Rousseau
et al. (1998) proposed the following combinatory denition:
Trust is a psychological state comprising the intention to accept
vulnerability based upon positive expectations of the intentions
or behaviors of another (p. 395).
In terms of how trust constructs are measured, there remain
considerable differences in opinion with respect to dimensional
considerations, focal points, and scale development. Research
has examined trust from both unidimensional and multidimensional considerations. For example, Lewicki et al. (2006)
describe how trust and distrust has been researched from a unidimensional perspective (e.g., trust and distrust are opposite ends
of a single dimension), a two-dimensional perspective (e.g., trust
and distrust are separate constructs, but are measured using the
same components), and a transformational perspective (e.g., different types of trust examined with the understanding that trust
changes over time). Li (2007) supports this contention that
despite disagreement over the specics of trust, scholars share
the view that trust is highly complex with multiple dimensions
(p. 423).
Despite acknowledgment that trust is multidimensional and
complex, McEvily and Tortoriello (2011) indicate that the majority of studies they analyzed empirically treated trust as a unidimensional construct with only a small minority of studies
examining trust from a multidimensional perspective. Further
complicating the issue, Lewicki et al. (2006, 997) note that unidimensional constructs may, in fact, be multifactorial such that
the construct includes subfactors, but is treated as a single,
superordinate factor (e.g., trust may be a single factor with both
expectation and vulnerability measures). Examples of perspectives (with both elements of expectation and vulnerability) used
in the broad literature include:
Ganesan (1994) measures two distinct components of interorganizational trust: (1) credibility (one partys expectations
about the required expertise of the other party), and (2)
benevolence (one partys beliefs that intentions and motivations of the other party will be benecial in the face of new
conditions/changes, indicating vulnerability).
Morgan and Hunt (1994) examine trust from an expectation
perspective, considering willingness [to be vulnerable] to be
redundant.
McAllister (1995) measures interpersonal trust from two perspectives: (1) cognitive; and (2) affective. Cognitive trust
involves expectations surrounding reliability and dependability, whereas affective trust entails condent attributions concerning the motivations for that persons citizenship
behavior (McAllister 1995, 30). As such, affective trust may
be considered as a willingness to trust.
Ganesan and Hess (1997) examine credibility and benevolence at two different levels (interpersonal trust between a
buyer and a sales representative and organizational trust that
the buyer and seller have for each others organization)
creating a four-factor model: interpersonal credibility; interpersonal benevolence; organizational credibility; and organizational benevolence.
119
Whipple and Frankel (2000, 23) measure two elements of interorganizational trust, based on Gabarros (1987) intraorganizational work: (1) character-based trust (i.e., integrity,
identication of motives, consistency of behavior, openness,
discreteness); and (2) competence-based trust (i.e., specic
competence, interpersonal competence, competence in business sense, and judgment) trust. Again, trusting in ones character represents elements of vulnerability, whereas trusting in
ones competence represents elements of expectations.
For this study, we propose trust as a multidimensional model,

combining elements of the perspectives illustrated above. The
purpose of this combinatory framework is to facilitate an analysis
of trust constructs used in the logistics/SCM literature. We do
not suppose ours is the only trust framework, but, rather, are creating a framework for literature review and article comparison.
We propose considering trust from a character-based and competence-based perspective (Gabarro 1987; Whipple and Frankel
2000). This perspective is consistent with previous research in
that it offers both elements of expectation (Ganesan 1994; Morgan and Hunt 1994) and willingness to be vulnerable (Lewicki
et al. 2006) and is highly similar to credibility and benevolence
as well as cognitive- and affect-based approaches. Consistent
with Hosmers (1995) multileveled categorization of trust, we
also propose that character and competency should be evaluated
at various levels of relationships (e.g., interpersonal, organizational).
We will examine interpersonal, organizational, and interorganizational levels of trust given the importance of interorganizational and alliance research to our elds intellectual foundation as
discussed by Charvet et al. (2008) and Georgi et al. (2010). It is
important to note that, while interorganizational research has largely examined how rms collaborate to enhance supply chain
integration and performance, interorganizational trust examines
trust that one rm has for another rm as used by Ganesan and
Hess (1997).1 Interorganizational trust can even be extended to
include a network perspective (e.g., trust that exists between
multiple rms). Organizational trust, as described by Ganesan
and Hess (1997), is the trust that one individual has (i.e., a
buyer) for another partys organization (e.g., the selling rm).
We will also examine items that may be focused on the interpersonal level (e.g., one individual to another individual). Given
previous research efforts in our eld, these four levels of trust
are most pervasive in terms of use within the context of interorganizational research. Certainly, there are also studies on intraorganizational trust (e.g., the level of trust a driver has for his/her
employer). However, those studies are outside the scope of this
study. Table 1 illustrates the framework we examined in this
study.
RESEARCH METHODOLOGY
To begin our analysis, we conducted a search of articles published over the past 20 years in key logistics/supply chain
1
Ganesan and Hess (1997) cite Larson (1992) in their denition of interorganizational trust.
120
Table 1: Trust framework
Type/level
Character-based
trust
Competence-based
trust
General
trust
Interpersonal (one individual to another individual)

Organizational (one individual to an organization)
Interorganizational (one organization to one other organization)
Interorganizational network (one organization to many organizations)
A
D
G
J
B
E
H
K
C
F
I
L
management journals to nd all articles focused on researching

trust. From these, we selected only articles that examined trust
using empirical, quantitative analysis of primary data. Conceptual
articles were not included in the analysis, nor were articles where
trust was not a core focus of the research (e.g., decision-making
experiments, which may have considered trust as an experimental
condition).
We focused on seven journals considered to be signicant
logistics/SCM journals, and found 42 articles that t the criteria.
The seven journals included were as follows:
1. International Journal of Logistics Management
2. International Journal of Physical Distribution and Logistics
Management
3. Journal of Business Logistics
4. Journal of Operations Management
5. Journal of Supply Chain Management
6. Transportation Journal
7. Transportation Research Part E: Logistics and Transportation Review
For each article identied, we reviewed and recorded key
information to assess our rst research question (i.e., how has
trust been measured and used in the logistics/SCM discipline).
For example, we recorded the following information on each
article: (1) the year and journal of publication; (2) specic information about the construct used; (3) the items included in the
construct; (4) whether the construct (or items) used was from a
previously published instrument or was newly created; and (5)
construct dimensionality. When the constructs or items were
from a previously published instrument, we examined the source
instrument (in many cases, we needed to trace the cited source
further until we found the original source) to assess whether or
not the full instrument was used and/or if items were adapted/
modied from the original source material. When newly created
constructs/items were included, we assessed whether or not, at
least, basic validity assessments were used (e.g., reporting of
Cronbach alpha for internal consistency of the scale items).
To address our second research question (i.e., is there consensus on how trust is measured), we compiled a list of each item
used in the 42 identied articles. A total of 231 measurement
items were catalogued. Duplicative items (e.g., asking the same
information and within the same context) were deleted. In cases
where the item was the same, but the context was signicantly
changed (e.g., an assessment of trust at an individual level vs. an
assessment of trust at the organizational level), both items were
retained. Ultimately, 119 unique items were retained for further
analysis. As part of this ltering process, we also generalized the
items by creating consistent terminology and removing any specic context (e.g., references to a third party logistics (3PL) provider, trucking rm, etc.). To obtain consistency, when items
referred to the respondents rm, we used the term my company, and when items referred to the other rm (e.g., the
respondent rms supplier), we used the term my partner rm.
In addition, we used consistent grammar whereby if the item was
discussing one rm, it was used (i.e., rather than they) and
vice versa. As an example of removing specic context, if an
item indicated, I trust the 3PL, the item was modied to I
trust the partner rm.
As part of this assessment, we also wanted to understand
issues with respect to measurement validity. We have focused
predominantly on validity issues that would be addressed as part
of early scale/survey development and measurement purication
(e.g., content validity, face validity, substantive validity). As
such, evaluating more advanced statistical validity (criterionrelated validity, convergent validity, discriminative validity) associated with the trust measures, while certainly important, is not
addressed in this article.
Our rationale for the focus on a restricted examination of
validity is best summarized with a quote from Dunn et al.
(1994): If content validity does not exist, then there is no reason
to proceed with the analysis because the desired construct is not
being properly represented by the group of items (p. 157).
Churchills (1979, 64) analogy of GIGOgarbage in, garbage
out also applies such that developing measures should start with
specifying and understanding the constructs domain, and, then,
developing items (or searching for existing items) that capture
the domain. In other words, without establishing good measures
at the start, construct validity will be difcult to obtain and/or
reliability will be challenging due to measurement error.
Content validity involves various considerations, and exists
when the construct is properly reected by the items as a
group (Dunn et al. 1994, 157). For example, face validity is
said to exist if the sample is appropriate (e.g., the correct domain
of study) and the survey items appear to respondents as valid
measures of the concept (Mosier 1947; Churchill 1979; Hair
et al. 1998, 117). Although face validity is often considered one
of the weakest measures of validity, face validity can be
enhanced by using experts to review and judge items as well as
by conducting multiple pretests across different populations (Hair
et al. 1998, 117).
Anderson and Gerbing (1991) discuss the concept of substantive validity and illustrated how pretesting techniques (e.g., itemsort task) could be used to rene and eliminate items prior to
survey nalization, which, in turn, should lead to stronger construct validity during empirical testing. While content validity
focuses more on how well the overall scale or items relate to the
construct, substantive validity examines each individual item for
its relevancy to the construct (Anderson and Gerbing 1991; Dunn
et al. 1994).
Item-sort task procedures, as discussed by Anderson and Gerbing (1991), relate closely with Q-sort procedures, and also
incorporate the idea of using a small, expert sample to review
and judge items as proposed by Hair et al. (1998) as well as
other classication schemes (as summarized in Hinkin 1995). Qsorting was invented by British physicist/psychologist William
Stephensen in 1935 as a means of extracting subjective opinion
and evolved from factor analytic theory (Brown 1997).
The Q-sort procedure is used to separate items in a multidimensional construct according to their specic domain (Zait and
Bertea 2011). It can be utilized on an exploratory basis or a conrmatory basis. Exploratory Q-sorting means that respondents
are given the items and asked to group and identify category
labels for each group of items, whereas conrmatory Q-sorting is
used when categories are already labeled and respondents are
asked to classify each item in one category (Zait and Bertea
2011). Conrmatory Q-sorting was used in the current research
project and the input provided by our Q-sort panel helped to
identify items that do not discriminate well between our constructs of interest.
A Q-sort was performed on the 119 unique items. First,
we wanted to determine item consistency with respect to the
level of analysis for each item (e.g., individual vs. organizational
trust). As such, Q-sort participants were asked to examine each
of the 119 items and determine whether the item was focused on
trust at one of the following levels: (1) individual to individual
(e.g., I trust him/her or he/she trusts me); (2) individual to organizational level (e.g., I trust this rm or he/she trusts my company); (3) one organization to one other organization (e.g., my
company trusts this rm or this rm trusts my company); (4) one
organization to many organizations (e.g., my company trusts
multiple rms); or (5) none of the previous choices (e.g., I am
not sure which level is appropriate). Consistency in participant
agreement on the level of analysis was then assessed.
Second, we examined item consistency with respect to how
trust was being conceptualized. As such, Q-sort participants were
asked to examine each item and determine whether the item was
focused on gauging: (1) character-based trust (i.e., dened as
examining the qualitative characteristics of behavior in strategic
philosophies and cultures such as integrity, true motives, consistency and predictability of behavior, openness, and discreteness);
(2) competence-based trust (i.e., dened as examining the specic operating behaviors and day-to-day performance such as
specic competence, knowledge, skills, ability to perform well,
area of expertise, and good judgment); (3) a general level of trust
(e.g., trust is not clearly specied as a specic type); or (4) none
of the previous options (e.g., I am not sure which type of trust is
being referred to in this question).2 Consistency in participant
agreement on the conceptualization was then assessed.
A total of 31 people participated in the Q-sort process. Participants were selected from three different populations to gain
2
The denitions of character- and competence-based trust are

based on Gabarro (1987) and Whipple and Frankel (2000).
121
disciplinary and industry perspectives: 17 participants were academicians familiar with the logistics/SCM literature; six participants were academicians familiar with the marketing/
management literature; and eight participants provided an industry/practitioner perspective.
We assessed consistency from two different perspectives. First,
for each item, we calculated the proportion of substantive agreement, a raw percentage of respondents that assign an item to the
intended category or construct (Anderson and Gerbing 1991). As
we were examining existing items rather than developing the
items and using the Q-sort as a pretest procedure, we did not
identify intended categories a priori. Instead, we report the category that the largest percentage of respondents deemed each item
belonged to, understanding that our categorization (Table 1) may
not be totally representative of the original domain of study for
the 42 articles. For example, if 28 of the 31 participants indicated that an item was examining individual-to-individual trust,
the proportion of substantive agreement was 90% for that item
(28/31). Table 2 shows the summary breakdown for both the
level and type of trust with respect to substantive agreement for
the 119 unique items.
Although the portion of substantive agreement suggests an element of construct validity by illustrating the extent to which an
item is categorized to represent its intended construct, it does not
illustrate the extent to which an item may also be related to a different construct (Anderson and Gerbing 1991). As such, we also
calculated the substantive-validity coefcient for each item, which
examines the extent to which respondents assign an item to the
intended construct more frequently than to a different construct
(Anderson and Gerbing 1991). The substantive-validity coefcient
is calculated by taking the number of respondents that correctly
classify the item to the a priori construct and subtracting the highest number of respondents who assigned the same item to a different construct, and, then, dividing that number by the total number
of respondents (Anderson and Gerbing 1991, 734). Again, we do
not have a priori assignments. As such, for each item, we examined the rst and second category that the largest percentage of
respondents classied for each item. For example, if 22 of the 31
participants indicated that an item was examining individual-toindividual trust, and six participants indicated that the item was
examining individual-to-organizational trust, and three participants
were not sure, the substantive-validity coefcient was .52 for that
item ([22 6]/31). Table 3 shows the summary breakdown for
both the level and type of trust with respect to the substantivevalidity coefcient for the 119 unique items.
Table 2: Q-Sort: Proportion of substantive agreement
Percent agreement
among respondents
100%
9099%
8089%
7079%
6069%
Under 60%
Total items
Level of trust
Type of trust
2
36
18
17
12
34
119
2
22
24
14
22
35
119
122
Table 3: Q-sort: Substantive-validity coefcient

Coefcient range
Level of trust
Type of trust
2
23
15
11
7
15
46
119
2
11
20
12
9
8
57
119
1.0
.90.99
.80.89
.70.79
.60.69
.50.59
Under .50
Total items
On the basis of the results of the Q-sort and the analysis

shown in Tables 2 and 3, we evaluated the 119 items to indicate
where content validity and substantive validity is likely to be
higher. Similar to Cronbach alpha and factor analysis cut-off recommendations, there is no established rule with respect to what
degree of substantive agreement or substantive-validity coefcient is required to retain an item after pretesting. Anderson and
Gerbing (1991) indicate for both measures, larger values indicate
greater validity. General guidelines for Q-sort procedures consider scores of 65% or greater to be acceptable (Jarvenpaa 1989).
As such, we took a conservative approach and used 70% as a
cutoff based on the agreement results shown in Table 2. Each
item was also examined with respect to the substantive-validity
coefcient. All of the items meeting or exceeding the 70% cutoff
for agreement had substantive-validity coefcients at .50 or
above with the except of two items in the level of trust Q-sort
and two different items in the type of trust Q-sort.
RESEARCH SUMMARY RESULTS
From the analysis, we were able to analyze the literature published to understand the overall landscape with respect to how
trust has been conceptualized in the logistics/SCM literature.
Since 1993, a total of 42 articles were published on trust in the
seven journals of interest. The rst empirical article to include
trust did not appear until 1995. The vast majority (83%) of the
articles that examine trust have been published in the last
10 years. The results illustrate an increasing interest in examining trust in the logistics/SCM literature. Figure 1 illustrates the
frequency of trust articles published over the 20 years of research
included in this article.
As shown in Figure 2, the majority of the articles (71%) were
published in three journals: Journal of Business Logistics, Journal of Operations Management, and Journal of Supply Chain
Management. Of the full set of articles, the majority (78%) used
existing scales, at least to some extent. As shown in Figure 3,
26% of the articles adopted the full set of items from the cited
source, 31% used a partial set of items from the cited course,
14% used a partial set of items from two or more sources. For
articles using new scales, 7% mixed newly developed scales with
items from a published source while 22% of the articles created
completely new items. Of the nine articles that used new items
and/or new scales, only 5 (55%) provided evidence of, at least,
basic construct validity testing (e.g., Cronbach alpha).
Of the 31 articles that included at least one trust-oriented item
from an existing publication, we assessed the discipline from
which the original source resided. Note: we found numerous
incidents of articles citing a source article only to nd that the
source article was not the original source for the item. It was
also not uncommon for the original source to be at least one
source removed, as authors cited sources of measures that were,
in fact, not the original sources; rather, the source had adopted
original measures from yet a different source article. Figure 4
illustrates that the majority of the source articles were from the
marketing discipline (53%), followed by the organization behavior/management literature (21%). Only two sources originated
within the logistics/SCM literature, and neither source was a
referred journal publication.
Table 4 provides a list of the rst-level source articles. The
table illustrates the number of times the source scales were replicated (i.e., the number of times this particular source article was
used in the 42 logistics/SCM articles examined within this article). Replication does not necessarily mean the full construct
and/or all construct items were used in the subsequent study;
rather, it refers to the use of these measures in some form in
Figure 1: Publication frequency.
Ar cles Published Annually

8
Percent Published in 5 Year

Increments
7
6
3%
5
14%
4
45%
1993-1997
1998-2002
2003-2007
38%
1
2011
2009
2007
2003
2005
2001
1999
1997
1995
1993
0
N = 42 ar cles
2008-2012
123
Figure 2: Percentage of publications by journal.
IJLM
5%
TJ
7%
TRE
7%
JSCM
22%
Table 4: Source citations and frequency of replication
IJPDLM
10%
Measurement instrument source
JBL
25%
JOM
24%
N = 42 ar cles
Figure 3: Construct development summary.
New Items
22%
Full Source
26%
Par al Source
with New Items
7%
Mix of
Sources
14%
Par al Source
31%
N = 42 ar cles
Figure 4: Reference sources by discipline.
Psychology/Soci
ology
5%
General
Business
5%
Organiza on
Behavior/Manag
ement
21%
Marke ng
53%
IT
5%
SCM
Related
11%
N = 19
subsequent research. The table also lists the citation journal to

illustrate the source discipline. The Appendix contains the citations for the 42 logistics/SCM articles.
Additional analysis focused on the dimensionality of trust in
the articles under study. As discussed previously, there is general
Doney and Cannon (1997), Journal

of Marketing
Kumar et al. (1995), Journal of Marketing
Research; and
Larzelere and Huston (1980), Journal of
Marriage and Family
Morgan and Hunt (1994), Journal of Marketing
Ganesan (1994), Journal of Marketing
Cummings and Bromiley (1996), Trust in
Organizations
Sin et al. (2005), Journal of Business Research
Cahill (2006), Customer loyalty in third party
logistics relationships: ndings from studies in
Germany and the USA
Deepen (2007), Logistics Outsourcing
Relationships: Measurement,
Antecedents, and Effects of Logistics
Outsourcing Performance
Jap (1999), Journal of Marketing Research
Joshi and Stump (1999), Journal of the Academy
of Marketing Science
McKnight et al. (2002), Information
Systems Research
Moorman et al. (1993), Journal of Marketing
Moorman et al. (1992), Journal of
Marketing Research
Plank et al. (1999), The Journal of Personal
Selling and Sales Management
Perrone et al. (2003), Organization Science
Robson et al. (2008), Organization Science
Sin et al. (2002), Journal of Services Marketing
Zaheer et al. (1998), Organization Science
Number of
replications
10
6
4
3
2
2
1
1
1
1
1
1
1
1
1
1
1
1
consensus that trust is a multidimensional and complex construct.

As such, we would assume that authors would consider it appropriate to model trust as a multidimensional construct where distinct dimensions of trust were measured (with multiple items)
and trust was essentially conceived as a higher order construct
(e.g., trust considered as resulting from two distinct dimensions,
such as honesty and benevolence). However, we found that not
to be the case. Rather, as shown in Figure 5, only three (7%) of
the articles reviewed considered trust to be a multidimensional
construct.
In the vast majority of instances, trust was tested as a unidimensional construct. In 30 articles, trust was assessed using a
single construct with numerous items. Sometimes, the items were
generic items of trust (e.g., the rm is trustworthy or I trust
him), and other times, a mix of dimensions of trust items were
included (e.g., benevolence, credibility, etc.). In a few cases, the
authors used two single, but independent, constructs of trust
(e.g., salesperson trust and organization trust), but did not
attempt to test the two constructs as related to a higher order
trust construct. However, none of the 30 articles discussed trust
124
Figure 5: Construct dimensionality.
Unidimensional
with Specic
Subfactors
2%
Figure 6: Q-sort agreement and agreement intersection.
Other
19%
Mul dimensional
7%
Agreement on
Level (N=73)
Agreement on
Type (N=62)
Unidimensional
72%
Agreement
Intersec on (N=38)
N = 42
being conceptualized as a construct with subfactorial design.
There was one article that considered trust as a unidimensional
construct made up of specic subfactors (i.e., benevolence and
credibility).
The remaining eight articles were coded as other with
respect to construct dimensionality. In ve of these articles, trust
was measured as a subfactor for a higher order factor. However,
the higher order factor was not trustrather, higher order factors
were constructs, such as relationship magnitude, supply chain
orientation, relationship orientation, and customer partnering
behavior. In the remaining three other articles, trust was a single-item measure used in a plethora of other measures without
construct development.
Table 5 summarizes how each article conceptualized trust as a
construct. As shown in the table, the vast majority of the articles
indicated the construct being measured was trust. In some
articles, two different trust-related constructs were measured,
such as benevolence and partners honesty or calculative trust
and affective trust.
After examining the data to assess the general status of trust
as it has been used in the logistics/SCM literature, the next step
was to analyze the Q-sort data to gain an understanding of elements of content and substantive validity. As indicted in Table 2,
73 items met or exceeded the 70% cutoff point for agreement for
the level of trust, representing 61% of the total 119 items. Of
these 73 items, 52 (71.2%) were categorized as focused on trust
between one organization and one other organization. The
remaining items were categorized as follows: 11 items (15.1%)
were trust between an individual and an organization; six items
(8.2%) were trust between one organization and many organizations; and four items (5.5%) were trust between individuals.
Table 2 also shows that 62 items met or exceeded the 70%
cutoff point for agreement for the type of trust, representing 52%
of the total 119 items. Of these 62 items, 54 of the items
(85.5%) were categorized as character-based trust. The remaining
nine items (14.5%) were categorized as competence-based trust.
Figure 6 depicts the overlap between items that achieved consensus upon level of trust and type of trust. A total of 38 items
had the minimum (70%) substantive agreement on both construct
aspects. As shown in Table 6, the vast majority of these 38 items
were categorized by participants as being character-based trust at
the interorganizational level (one organization to one other organization). Table 7 provides the actual questionnaire items as well
as where each of these 38 items falls within our proposed framework (Table 1).
In addition, we catalogued the items that have the least clarity
with respect to agreement on the level and/or type of trust. Items,
where seven or more Q-sort participants (roughly 25% of the
Q-sort sample) indicated that they did not know what level or
type of trust the item was intended to measure, were deemed to
lack clarity within our framework.3 Furthermore, any items,
which had a substantive-validity coefcient of zero, were also
considered to be poorly specied, as Q-sort participants were
split 50/50 in their assessment of the item as being in one of two
categories (e.g., half of the participants felt the item related to
general trust and half of the participants were unsure which category the item belonged to). Table 8 lists the specic items with
the least agreement.
Table 5: Construct name and frequency

Construct name
Frequency of usage
Trust
Benevolence
Partners honesty
Dependability
Objective credibility
Calculative trust
Affective trust
38
4
2
1
1
1
1
DISCUSSION
Logistics and SCM research has become progressively more
sophisticated since the Journal of Business Logistics published
3
It is important to note that we are not determining the validity

of these items with respect to how they were used in the original
logistics/SCM article. Rather, we are using our framework to
determine its ability to categorize and understand these measurement items.
125
Table 6: Agreement interaction within the framework
Type/level
Character-based
trust
Competence-based
trust
General
trust
Total
Interpersonal (one individual to another individual)

Organizational (one individual to an organization)
Interorganizational (one organization to one other organization)
Interorganizational network (one organization to many organizations)
Total
2
8
23
2
35
0
0
3
0
3
0
0
0
0
0
2
8
26
2
38
Table 7: Items with agreement interaction
Questionnaire item
This person is trustworthy
This person does not make false promises
I feel that this partner rm negotiates honestly
I feel that this partner rm does not try to get
out of commitments
I feel that this partner rm negotiates joint
expectations fairly
I think that the partner rm tells the truth in
business dealings
I feel that the partner rm dealt with me honestly
I feel that the partner rm succeeds by
stepping on other people
I think that the partner rm took advantage
of my problems
I feel that the partner rm takes advantage of
people who are vulnerable
We can count on the partner rm to consider
how its decisions and actions will affect us
When we share our problems with the partner
rm, we are condent that it will be
understanding
In our relationship, the partner rm is sincere
in its promises
In our relationship, the partner rm treats my
company fairly and justly
If the partner rm gives us some advice, we are
certain it is its honest opinion
Regarding problems, this partner rm is always
honest with us
We trust this partner rm keeps our best interests
in mind
This partner rm embodies the values we hold to
be most important
This partner rm deals with us in a straightforward
manner that reveals its true motives and
desired outcomes
My company is accustomed to keeping the best
interests of the partner rm in mind
Table 7: (Continued)
Code from
Table 1
A
A
D
D
D
D
D
D
D
D
G
G
G
G
G
G
G
G
G
G
Continued.
Questionnaire item
The partner rm is fair in its dealing with your
company
We know this partner rm is sincere with us
This partner rm never uses opportunities that
arise to prot at our expense
This partner rm is interested in our companys
well-being and not just its own
This partner rm is truthful in its dealings
with our company
Our company would characterize this partner
rm as being honest
Our company feels that this partner rm cares
about what happens to us
This partner rm is always frank and truthful
in its dealing with us
We believe in this partner rm because it is sincere
This partner rm has always been evenhanded in
its negotiation with us
Even when the partner rm gives us a rather
unlikely explanation, we are
condent that it is telling the truth
The partner rm usually keeps the promises
that it makes to our company
When making important decisions, it is customarily
expected that my company consider the partner
rms welfare alongside its own
The partner rm correctly carries out tasks that we
cannot directly control
This partner rm is competent and effective in its
interactions with our company
It is necessary for us to be condent about the
competence of this partner rm
Our company and these rms are very honest in
dealing with each other
Please describe the degree of trust that exists
between your company and the partner rms:
The extent to which these rms are well known
for their fair dealing
Code from
Table 1
G
G
G
G
G
G
G
G
G
G
G
G
G
H
H
H
J
J
126
Table 8: Items generating the least agreement*

Level of trust
Please describe the nature of this partner rms
relationship governance structure (17)
The level of trust in this relationship is very high. (16)
Whoever is at fault, problems need to be solved together (15)
The salesperson will always use good judgment (12)
In general, this partner rm is knowledgeable about its
industry and business operations (11)
Please describe the level of trust toward this partner rm (11)
This salespersons rm has a poor reputation (11)
This salesperson is not a real expert (11)
This salespersons rm has quality people working for it (11)
The partner rm brings high ethical standards to its work (10)
This partner rm performs all of its roles very well (10)
This partner rm is sincere and genuine (10)
The purchasing agent has high integrity (9)
The purchasing agent is overall trustworthy (9)
Overall, this partner rm is capable and procient (9)
The partner rm is trustworthy (9)
It is critical for this partner rm to fulll its obligations
even without being monitored (9)
The partner rm adheres to an acceptable set of principles (9)
There are no doubts regarding the partner rms motives (9)
This is a highly knowledgeable manager (8)
This partner rm keeps its commitments (8)
This partner rm cannot be trusted at times (8)
This partner rm is always faithful (8)
This partner rm has a high level of integrity (7)
This partner rm does not make false claims or promises (7)
Both parties are willing to make mutual adaptations (7)
The partner rm lives up to the spirit of its commitments (7)
Promises made by these partner rms are reliable (7)
Type of trust
Please describe the nature of this partner rms relationship
governance structure (21)
My company expects that all kinds of procedures in the relationship
with the partner rm will become self-evident (10 and SVC)
Whoever is at fault, problems need to be solved together (10)
It would be illogical for the partner rm to abuse my companys
trust (10)
My company will be able to understand the partner rm well (10)
Both parties watch the others protability (9)
The salesperson did everything possible for our company (8)
My company is able to understand the partner rms positive
behaviors (8)
Both parties are willing to make mutual adaptations (7)
Please describe the level of trust toward this partner rm (7)
This salespersons rm has a poor reputation (7)
Notes: *After each item, there is a number in parentheses. This indicates how many of the 31 Q-sort participants did not know how to categorize this
item. Also, for any items where the substantive-validity coefcient was zero, this is indicated as SVC in the parentheses. Italics indicate that the item is
on both the level of trust and the type of trust lists.
its rst issue some 35 years ago. Although there have been
many important contributions to theory and practice, many
opportunities still exist for improvements to the eld. We focus
on one such opportunitybetter scale development. While we
selected trust for examination, it is likely that virtually all of our
elds constructs/research efforts could benet from improved
measures. Developing better scales has the potential for signicantly improving our chance of conducting meaningful research
and theory advancement. Researchers constantly ght the battle
to secure adequate responses and good data. With better, more
precise scales that are user friendly, perhaps, we will enjoy better response rates and lessen participant fatigue.
The lack of replication of trust measures to date suggests that
researchers in the eld are unsatised with the existing measures.
Or, as suggested by McEvily and Tortoriello (2011) when dis-
cussing the nascent state of trust in the organizational literature,

It may also be the case that necessity is the mother of invention and that organizational researchers have devised idiosyncratic measures of trust due to the lack of availability of
carefully designed and validated instruments (p. 35). Regardless
of the reason, our analysis underscores the need for greater scale
development. For example, numerous gaps can be observed in
Table 6 revealing areas where no measures achieved sufcient
agreement among our panel of respondents. Researchers are
urged to focus on new scale development and purication of
scales in cases where insufcient clarity currently exists, as the
available supply of measures appears low. The starting point
should be better conceptual denitions, sound theoretical bases,
face validity, and use of pretest logic such as detailed here (Qsort) to purify the scale prior to distributing surveys. Until these
basic qualities can be attained, concern about discriminant and

convergent validity as well as reliability associated with the constructs developed from trust measurement items is likely to continue as advanced validity is potentially being assessed based on
a weak foundation.
It is also important that logistics and supply chain researchers
make greater effort to precisely document scale items in their
published manuscript. For example, while there is a temptation
to shorten manuscripts to conserve space, full scale items including any lead-in (explanation of responding to the items/questions) should be included. When existing scale items are used or
modied, full credit should be given to the researcher(s) who
originally developed the scale.
To be clear, we are not advocating for or against any of the
measures described above; merely, we suggest that work remains
in developing a set of clearly understood, useful measures of
trust to guide the interorganizational relationship research within
our discipline. Given that we only had access to the survey information provided by the authors in the 42 articles we examined
and not the original survey instruments, it may be that the asused measures were more readily specied and understood by
the respondents of those surveys. However, this further adds to
our call that more complete information be reported about measurement scales, to facilitate the type of replication necessary for
advancement of logistics and supply chain research (Goldsby and
Autry 2011).
CONCLUSIONS AND FUTURE RESEARCH
As results illustrate, signicant opportunities exist for contribution to the eld through the development of valid measures of
trust in the logistics and supply chain setting. It appears as
though sufcient measures of interorganizational (e.g., one organization to another organization), character-based trust exist.
However, scale development and testing is warranted in other
areas suggested by our framework. For example, interorganizational, competence-based trust, while possessing a minimum
number of measures (n = 3), likely would benet from additional
scale development as would organizational, character-based trust
(n = 8). All other areas within the framework reveal a lack of
well-understood measures. The fact that only two measures of
interpersonal trust, not enough to build a credible construct, were
consistently understood by respondents indicates that sufcient
work remains in this important area of trust assessment. Last,
although interorganizational network trust appears to be a special
case, it is clear that additional scale development is needed at
this level of trust. This development is particularly important
given the increase in interest in logistics/SCM research focused
on social network theory and social network analysis methods.
In summary, trust is obviously a prime area for future
research. Intense work is needed on scale development that
offers a multidimensional framework, which would more accurately reect the true complexity associated with trust. Once
scales are developed and initially tested for early validity (content and substantive), testing and empirically validating (convergent, discriminant, criterion-related validity) such items using
multiple subsamples is warranted.
127
APPENDIX: STUDIES INCLUDED IN THIS REVIEW

Cai, S., Jun, M., and Yang, Z. 2010. Implementing Supply
Chain Information Integration in China: The Role of Institutional
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128
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Roles of Procedural and Distributive Justice in Logistics Outsourcing Relationships. Journal of Business Logistics 33
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Huang, X., Gattiker, T.F., and Schwarz, J.L. 2008. Interpersonal Trust Formation During the Supplier Selection Process:
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Logistics Outsourcing Relationships: Customer Perspectives.
Journal of Business Logistics 24(1):77109.
Knemeyer, A.M., and Murphy, P.R. 2004. Evaluating the
Performance of Third-Party Logistics Arrangements: A Relationship Marketing Perspective. Journal of Supply Chain Management 40(1):3551.
Kwon, I.-W.G., and Suh, T. 2004. Factors Affecting the
Level of Trust and Commitment in Supply Chain Relationships.
Journal of Supply Chain Management 40(2):414.
Larson, P.D. 1998. Carrier Reduction: Impact of Logistics
Performance and Interaction with EDI. Transportation Journal
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Larson, P.D., and Gammelgaard, B. 2001, The Logistics
Triad: Survey and Case Study Results. Transportation Journal
41(2/3):7182.
Leahy, S.H., Murphy, R.P., and Poist, R.F. 1995. Determinants of Successful Logistical Relationships: A Third-Party Provider Perspective. Transportation Journal 35(2):513.
Li, Y., Li, P.P., Liu, Y., and Yang, D. 2010. Learning Trajectory in Offshore OEM Cooperation: Transaction Value for Local
Suppliers in the Emerging Economies. Journal of Operations
Liu, Y., Luo, Y., and Liu, T. 2009. Governing BuyerSupplier Relationships through Transactional and Relational Mechanisms: Evidence From China. Journal of Operations
Moberg, C.R., Cutler, B.D., Gross, A., and Speh, T.W. 2002.
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tives on Collaborative Relationships Differ? Journal of

Omar, A., Davis-Sramek, B., Myers, M.B., and Mentzer, J.T.
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Flexibility in Supply Chains. Journal of Business Logistics 33
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Sharland, A., Eltantawy, R.A., and Giunipero, L.C. 2003.
The Impact of Cycle Time on Supplier Selection and Subsequent Performance Outcomes. Journal of Supply Chain Management 39(3):412.
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Terpend, R., Krause, D.R., and Dooley, K.J. 2011. Managing
Buyer-Supplier Relationships: Empirical Patterns of Strategy Formulation in Industrial Purchasing. Journal of Supply Chain
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SHORT BIOGRAPHIES
Judith M. Whipple (PhD Michigan State University) is an
Associate Professor in the Department of Supply Chain Management at Michigan State University. Her research interests include
collaboration, risk management, and supply chain organizational
design. Judy has published work in various logistics/supply chain
management journals.
Stanley E. Grifs (PhD The Ohio State University) is an
Associate Professor in the Department of Supply Chain Management at Michigan State University. His research interests include
supply chain disruptions, customer valuation of logistics, and
network design. He has published work in a variety of logistics,
supply chain, and related journals.
Patricia J. Daugherty (PhD Michigan State University) holds
the Bowersox Chair in Logistics and Supply Chain Management
in the Department of Supply Chain Management at Michigan
State University. She is a former editor of the Journal of Business Logistics and has published widely in logistics and supply
chain journals.

Environmental Development of Emerging Economy Suppliers:

Antecedents and Outcomes
Matthias Ehrgott1, Felix Reimann1, Lutz Kaufmann1, and Craig R. Carter2
1
2
WHUOtto Beisheim School of Management

Arizona State University
s supply chains spread toward emerging economies, Western buying rms frequently face the question of whether they should commit
resources to develop their suppliers in these regions in terms of environmental issues. Supplier development researchers have just begun
to consider environmental aspects, and thus far, the peer-reviewed literature has remained primarily qualitative, and often descriptive. Largescale empirical evidence indicating the antecedents and benets of environmental supplier development for a buying rm is still scarce.
Addressing this gap, we use stakeholder theory to complement and extend the work of Ehrgott et al. (2011) and investigate how pressures from
customers, governments, and employees act as antecedents to environmental supplier development. Furthermore, we build on the resource-based
view to examine how supplier capabilities, buying rm environmental reputation, and organizational learning in the buying rm can result from
such supplier development initiatives. We test the resulting model with a sample of 244 corporate procurement executives from the United
States and Germany.
Keywords: environmental sustainability; supplier development; emerging markets; international purchasing; stakeholder theory; resource-based
view
INTRODUCTION
As supply chains spread toward emerging economies (Kusaba
et al. 2011; Geref and Lee 2012), the debate about the responsibility of Western buying rms to educate their suppliers with
regard to environmental issues has become increasingly relevant
to supply chain and sustainability research. Suppliers from many
parts of Asia, Eastern Europe, and Latin America often lack the
necessary managerial and technological capacities, as well as the
awareness to address the environmental issues inherent in their
businesses (Child and Tsai 2005; Zhu et al. 2011). Thus, buying
rms in developed nations that source from these regions face
the question of whether to commit resources to environmental
concerns beyond their own organizational boundaries, toward
their upstream supply chains (Pagell and Wu 2009; Bai and Sarkis 2010). The supplier development literature has only recently
started to recognize such environmental efforts as part of rms
supplier development initiatives. This recent literature has
focused on providing a descriptive overview, formal modeling,
or case-based investigation of issues related to environmental
supplier development (Pagell and Wu 2009; Bai and Sarkis
2010; Reuter et al. 2010; Fu et al. 2012). While Ehrgott et al.
(2011) examine the inuence of key stakeholders to socially sustainable supplier selection, we note a dearth of large-scale
empirical studies that examine the stakeholder antecedents to
buying rms engagement in environmental supplier development
efforts, and the precise benets the buying rm can reap through
such engagement. Notable exceptions that have made initial
headway into the phenomenon are Eltayeb et al. (2010) and
Vachon and Klassen (2008). We add to this evolving stream by
Matthias Ehrgott, WHUOtto Beisheim School of Management,
Burgplatz 2, 56179 Vallendar, Germany; E-mail: matthias.ehrgott@
whu.edu
investigating two research questions: (1) Which stakeholder pressures act as antecedents for Western buying rms to engage in
developing the environmental capabilities of their emerging economy suppliers? and (2) Which tangible benets can rms capture
through such environmental supplier development efforts?
Our denition of environmental supplier development
encompasses all activities through which the buying rm helps
its suppliers reduce their negative environmental impact. Such
activities typically include environmental supplier education
(e.g., training that reduces emissions through better ltering and
waste treatment, as well as improved efciency in production
technology), environmental on-site supplier support (e.g., provision of on-site technical assistance to redesign existing processes), and joint environmentally oriented business projects
(e.g., collaboration to jointly develop green innovations and technologies) (Carter and Carter 1998; Min and Galle 2001; Eltayeb
et al. 2010). Also, such activities typically involve several of the
buying rms functions (including purchasing, research and
development [R&D], production, human resources, and logistics)
to collaborate in a cross-functional team (Schaefer and Kosansky
2008; Paulraj 2011). We denote rms environmental efforts in
general (i.e., beyond environmental supplier development) using
the term environmental sustainability and efforts including both
environmental and social sustainability aspects by the broader
term sustainability.
The theoretical lenses through which we examine our research
questions are stakeholder theory (Freeman 1984; Frooman 1999)
and the resource-based view (RBV) of the rm (Wernerfelt
1984; Barney 1991)concepts that scholars frequently draw on
for investigating sustainability efforts (Clarkson 1995; Hart 1995;
Sharma and Vredenburg 1998; Aragon-Correa and Sharma 2003;
Garriga and Mel!e 2004; Ehrgott et al. 2011).
Stakeholder theory posits that rms must consider a broader set
of stakeholder interestsbeyond nancial rm performanceto
maintain their business activities in the long run (Freeman 1984).
These interests increasingly include the preservation of the natural
132
environment (Phillips and Reichart 2000), which provides the

fundamental means of existence for the rm. In our research, we
look specically at the role of employees, governments, and
customers in inuencing the rms environmental supplier development decisions, particularly because the existing sustainability
literature has found conicting evidence on their inuence,
depending on the specic study context.
Concerning the inuence of employees, Reuter et al. (2010)
conduct case studybased work and nd that top management
employees (rather than middle management or lower level
employees) are a primary antecedent to the purchasing functions involvement in, for example, emission reductions and
waste treatment improvements. In contrast, Ehrgott et al.
(2011), Carter et al. (2007), and Carter and Jennings (2004)
nd that middle managers have a signicant driving role in
other sustainability activities of the purchasing function. In
terms of government inuence, Walton et al. (1998) nd governments serving as antecedents for some rms environmental
activities in the supply chain (e.g., selection of environmentally
friendly input factors and environmentally friendly product
designs). However, Carter and Carter (1998) and Carter and
Jennings (2004) nd no inuence from governments on other
types of environmental activities (e.g., reusing and recycling
packaging materials). Regarding customers, Pomering and Dolnicar (2009) and Maignan (2001) nd no inuence on other
sustainability efforts. However, Deephouse and Heugens (2009)
and Ehrgott et al. (2011) propose such inuence. To our knowledge, no large-scale empirical evidence exists on the antecedent
role that these three stakeholder groups play with regard to the
specic context of environmental supplier development. Thus,
an investigation seems warranted. For our study, we develop a
theoretical framework in which we argue that each of these
three stakeholder groups positively inuences the intensity with
which buying rms engage in environmental supplier development efforts.
The RBV complements the stakeholder perspective in that it
focuses on the unique organizational resources that allow a rm
to differentiate itself from the competition (Wernerfelt 1984;
Barney 1991). Numerous scholars emphasize that environmental
strategies allow rms to augment their resource base, in particular
by enhancing their ability to continuously innovate, meet market
requirements, and integrate with other stakeholders, such as
upstream business partners (Hart 1995; Sharma and Vredenburg
1998; Aragon-Correa and Sharma 2003; Hitt 2011). In our study,
we tie in with the ndings by Sharma and Vredenburg (1998),
who propose that three primary resources rms can augment
through their environmental efforts relate to their technological
and managerial capabilities, their standing with stakeholders, and
increased internal organizational learning. For the context of our
study, these resources translate into three hypothesized outcomes
of environmental supplier development: suppliers strategic capabilities, the buying rms environmental reputation, and organizational learning in the buying rms purchasing function.
We test our model with a sample of 244 purchasing managers
from buying rms in two home countries: the United States and
Germany. Firms in both countries source signicant parts of their
purchasing volumes from emerging economies (Kaufmann and
Carter 2002; Ruamsook et al. 2007). Our denition of emerging
economies is based on the Forbes-accredited ISI Emerging Mar-
M. Ehrgott et al.
kets list, resulting in the inclusion of 50 relevant sourcing countries. (See the Methodology section and Appendix 1 for further
details.)
The remainder of this article is organized as follows. Next, we
provide a brief review of the literature on environmental supplier
development. We then develop the hypotheses that determine our
theoretical framework, using an antecedent-environmental supplier
development-outcome structure and building on prior research in
the eld. Subsequently, we describe the studys methodology. In
the nal sections, we present the empirical ndings, discuss implications and limitations, and identify directions for future research
in the area.
ENVIRONMENTAL SUPPLIER DEVELOPMENT
LITERATURE AND CONCEPT
During the past two decades, the literature on supplier development has evolved signicantly (Hartley and Jones 1997; Krause
and Ellram 1997; Krause et al. 1998; S!anchez-Rodriguez et al.
2005; Wagner 2006). Leenders (1966) describes supplier development as a buying rms efforts to improve its suppliers performance. More recently, scholars in the area have started to
argue for a more ne-grained perspective on supplier developmentone that accounts for the conceivably very different goals
behind such initiatives (Krause 1999; Wagner and Krause 2009).
In this respect, Krause (1999) nds improvements in quality,
delivery, cost structure, new technology adoption, nancial
health, and product design capability as frequent underlying
objectives. Krause and Handeld (1999) add to this list the
improvement of communication and alignment of procedures in
the buyersupplier relationship, which aim at lowering future
coordination costs.
Depending on the priority of these goals for the buying rm, the
magnitude and type of interventions with the suppliers processes
and operations as part of supplier development programs differ
(Wagner and Krause 2009). For example, delivery-oriented
supplier development might include changes in the suppliers
logistics and production planning routines. Product design-oriented
supplier development, by contrast, might focus more on changes in
R&D processes, the product input factor portfolio, and production/
assembly equipment and processes.
The notion that the development of suppliers might also serve
environmental goals has only recently entered the supply chain
literature. In this vein, Bai and Sarkis (2010) note that investigation into [environmental] supplier development programs is
virtually non-existent (p. 1200). One of the few established
terms in the eld was coined by Vachon and Klassen (2008).
They refer to joint ecological efforts between buying rms and
suppliers as environmental collaboration, which typically
includes environmental supplier training (to spur initiatives such
as emissions reduction, advanced waste treatment, and resource
efciency), on-site intervention with suppliers production processes and operations to improve their environmental footprint,
and joint projects to develop green innovations (Carter and Carter 1998; Min and Galle 2001; Eltayeb et al. 2010; Azadegan
2011). Several major corporate projects targeted at environmental
supplier development have recently been made public. BASF,
the multinational chemicals conglomerate, has launched a joint
Environmental Supplier Development
initiative with the United Nations Global Compact, the United

Nations Industrial Development Organization, and the United
Nations Environment Program to increase environmental performance of smaller and medium-sized suppliers in emerging economies. As part of the project, BASF and its partners assess
supplier performance in terms of energy consumption, emissions,
toxicity, and materials consumption; BASF experts also engage
in technical cooperation projects by providing coaching and technical support on-site at various suppliers (Bethke and Bluethner
2003). Similar initiatives were launched at other rms, including
Pentland, Nike (UNIDO 2004), and Coca-Cola (Jordan 2011).
The program initiated by Pentland and Nike, for example,
involves developing small and medium enterprise suppliers to
meet international standards around chemicals use and disposal.
Vachon and Klassen (2008) note that, contrary to control-oriented concepts (e.g., supplier monitoring), such supplier development efforts are targeted less at a suppliers immediate
environmental impact and more at building the suppliers longterm capacity to operate in an environmentally sound way.
The question of what antecedes rms engagement in environmental supplier development and what outcomes such efforts
have is not well addressed in the peer-reviewed literature.
In identifying potential antecedents, we thus integrate the broader
sustainability literature that has continuously studied how different stakeholder pressures spur rms commitment to sustainability activities (Henriques and Sadorsky 1999; Klassen 2001;
Ehrgott et al. 2011). This stakeholder perspective is also novel to
the broader literature eld on supplier development, where the
discussion of antecedents has focused mainly on top management
recognition of the purchasing function, importance of purchased
items, interrm communication quality, and supplier commitment, among others (Krause 1999; De Leeuw and Fransoo
2009).
Regarding outcomes, it seems particularly interesting to investigate whether efforts that are primarily targeted at improving
environmental shortcomings at the supplier site also yield
broader benets for the buying rm and thus provide even
greater justication for these development programs. To identify
such possible broader benets, a resource-based perspective can
be employed to consider how the complex and intensive efforts
behind environmental development programs allow the rm to
build or augment its competitive resource base. For example,
efforts to improve suppliers resource efciency/emissions footprint might closely relate to an upgrade of their production technology standards, and thus to the buying rm beneting from
better product quality and delivery reliability.
Studying the questions about antecedents and outcomes of
environmental supplier development appears particularly fruitful
in the context of relationships that Western rms have with
emerging economy suppliers. Wouters et al. (2007) argue that
the areas in which suppliers from emerging economies need to
be developed might substantially differ from those of suppliers
in mature markets. In particular, the lesser developed infrastructure and more rudimentary legal systems in such regions (Reimann et al. 2012) might lead buying rms to more intensively
focus on sustainability related supplier development programs
than they do in mature market environments. We subscribe to
this view and expect the examined relationships to be particularly
pronounced in emerging economy settings, because the gap
133
between actual and desired environmental performance is likely

to be greater than it would be for suppliers in mature markets
(Child and Tsai 2005; Zhu et al. 2005, 2011).
ANTECEDENTS OF ENVIRONMENTAL SUPPLIER
DEVELOPMENT
Stakeholder theory (Freeman 1984) has been fundamental in providing a more precise understanding of both the environmental
pressures a rm faces and the suitable strategies (i.e., environmental activities) rms can use to respond to them (Waddock
and Graves 1997; Henriques and Sadorsky 1999). Freeman
(1984) denes stakeholders as any group or individual who can
affect or is affected by the achievement of the rms objectives
(p. 25). We focus our investigation on customers, governments,
and middle managersconstituencies whose inuence on rms
sustainability activities has been found to differ strongly,
depending on the specic type of sustainability effort investigated. Accordingly, we develop hypotheses concerning the specic links among pressures from customers, governments, and
middle managers and environmental supplier development
efforts.
Customer environmental pressures
We dene customer environmental pressures as the importance
that customers of the buying rm attribute to environmental
aspects in the upstream supply chains in their buying decisions
(Drumwright 1994; Sen and Bhattacharya 2001; Christmann
2004). We have chosen to measure pressure from the buying
rms direct customers, that is, for business-to-business (B2B)
rms from other companies in the downstream supply chain and
for business-to-consumer rms from the end-consumers of their
products. Particularly for B2B rms, our preinterviews revealed
that the strongest pressure typically comes from customers who
have the most direct contact.
Customers, in their scrutiny of environmental issues, increasingly consider activities in the upstream supply chain and thus
beyond the rms own production processes (Ciliberti et al. 2009;
Hietbrink et al. 2010). Therefore, customers might demand products that are guaranteed to be manufactured end-to-end with low
emissions and without harmful waste materials (Carter and Jennings 2004). Rising media coverage and legal requirements that
compel rms to provide customers with such information foster
this development (Carter and Rogers 2008; Deephouse and Heugens 2009). The concept of customer/company identication (Sen
and Bhattacharya 2001) lends support to our expectation that if
rms receive environmental pressures by their customers, they
might see environmental supplier development as an effective
means to deliver on such expectations. Particularly, customers are
likely to prefer engaging in business relationships with companies
that match their environmental values and to avoid doing business
with rms that fail to do so. Environmental supplier development
requires the allocation of signicant resources (Bai and Sarkis
2010), thus signaling a rm commitment to environmental causes
and congruence with the values of those customers who strive for
environmental improvements themselves. Not least, environmental
134
supplier development can reduce the risk of spills and other environmentally harmful incidents at the supplier sites (Lee and Klassen 2008) that the buying rms customers would consequently
judge negatively. Together, these considerations suggest that environmental supplier development is a suitable response to environmental customer pressures. Hence:
H1: Customer environmental pressures are positively
related to environmental supplier development.
Government environmental pressures
Government pressures refer to the strength with which a rms
home country government pushes rms to undertake greater
environmental efforts. We opt for this home country perspective
(Ehrgott et al. 2011) because environmental regulation in the
United States and Europe has seen a strong rise in stringency
(Emmelhainz and Adams 1999; Goldsby and Stank 2000; Mollenkopf et al. 2005) and ranks among the most advanced with
regard to covering rms upstream supply chains (Linton et al.
2007). Our conceptualization incorporates not just the level of
current environmental regulatory pressures but also expectations
about future pressures.
In terms of the rms environmental supplier development
efforts, expectations about future, heightened regulation are particularly likely to inuence rm conduct. Firms that expect regulators to set higher environmental standards in the future would
tend to engage in supplier development in the present to prepare
for the changes, thus ensuring that their supply base meets the
anticipated requirements. In doing so, the buying rm reduces
the risk of high readjustment costs (e.g., supplier switching costs)
if tighter environmental regulations are implemented (Barnett and
King 2008; Ehrgott et al. 2011). Environmental supplier development in itself might not be the most obvious response to environmental government pressures because it seldom addresses the
entire supplier base (thus not necessarily leading to consistent
standards) and it takes time to implement (thus not effectively
addressing regulation that requires immediate adherence). Still,
looking at prospective future tightening of regulation, environmental supplier development allows the buying rm to keep
business relationships with suppliers that are not or will not be
able to reach the required environmental standards by themselves, but who are generally good business partners. Hence:
H2: Government environmental pressures are positively
related to environmental supplier development.
Middle management environmental pressures
We conceptualize environmental pressure from employees by
focusing on the inuence of one specic group of employees:
middle managers in the purchasing function. Here, we build on
the work of Drumwright (1994), who nds that most [originators of environmental initiatives] were well-respected middle
managers who had a claim to a hearing through some type of
power (p. 4). We dene environmental pressure from middle
management as the extent to which purchasing middle managers,
in self-motivated and proactive ways, push their employer to
improve the environmental standards in its supplier base. Partici-
M. Ehrgott et al.
pants from our survey pretest described different ways in which

middle managers raise their concerns. They might regularly ask
to put environmental supplier performance on the agenda of corporate sourcing committee meetings, ask to bring along environmental experts to supplier audits to identify gaps, and initiate
working groups to develop multistaged measures that can help
suppliers improve their performance (including consequent monitoring of progress and escalation mechanisms).
Stakeholder theorists suggest that middle managers wield
inuence over the rm because they are to a certain degree more
difcult to replace than lower level employees. Specically, middle managers constitute the link between the rms executive
management and the operational workforce. They possess certain
strategic knowledge, and they play a crucial role in securing the
trust of large parts of the employee base in the rms management decisions (Frooman 1999; Arens and Brouthers 2001;
Ehrgott et al. 2011).
Our expectations about middle managers inuence on rms
environmental supplier development efforts are based on the
tenets of social identity theory (Backhaus et al. 2002; Ehrgott et
al. 2011), suggesting that employees derive some of their selfesteem from their connection with their rm, including their
rms values and business practices (Dutton et al. 1994). Similarly, Kristof (1996) writes that employees support of the rm is
strongly determined by the congruence of their values with those
of the rm. Consequently, when middle managers put pressure
on the rm to act in an environmentally responsible way, buying
rms are well served by responding with strong environmental
efforts. Environmental supplier development can be seen as a
fruitful form of response because it is a particularly proactive
and resource-intensive initiative and thus signals the rms value
alignment with its middle management group. Hence:
H3: Middle management environmental pressures are positively related to environmental supplier development.
OUTCOMES OF ENVIRONMENTAL SUPPLIER
DEVELOPMENT
According to the RBV, a rms ability to differentiate itself from
and get ahead of the competition depends substantially on the
organizational resources it possesses and the way it combines
them (Wernerfelt 1984; Barney 1991). In particular, competitive
advantage can be maintained if the rms rivals have difculty
imitating or nding substitutes for the rms resources (Barney
1991). Linking the RBV to a rms environmental strategy, Hart
(1995) introduces the natural resource-based view, according
to which environmental efforts give the rm unique, inimitable
resource constellations. This inimitability arises when rm efforts
comprise a rich and intricate (and to the outsider opaque) interaction of parties and resources. Sharma and Vredenburg (1998)
propose resource categories that rms can develop through their
environmental efforts when they involve complex organizational
interaction, including technological and managerial capabilities,
environmental rm reputation reecting rms standing with
stakeholders, and organizational learning. We argue that environmental supplier development as one form of such complex environmental activities is positively associated with the suppliers
strategic capabilities, including their technological and managerial skills (Vachon and Klassen 2008), from which the buying
rm ultimately benets as well. Also, environmental supplier
development can be perceived as an extraordinary environmental
commitment by the buying rm, and we expect such a commitment to positively affect the buying rms environmental
reputation. Finally, we argue that environmental supplier development can be a platform for substantial organizational learning,
not only on the supplier side but also, particularly, for the buying
rm itself.
Suppliers strategic capabilities
Suppliers strategic capabilities center on the longer term organizational characteristics of the rms suppliers. Management quality (Stump and Heide 1996), nancial stability (La Londe and
Masters 1994), and technological capabilities (Monczka et al.
1995) can be seen as key reections of these characteristics (Ehrgott et al. 2011). For the buying rm, understanding suppliers
strategic capabilities is critical because these capabilities determine the suppliers capacity to innovate and remain competitive
and thus to participate in a stable and longer term business relationship. Managers interviewed during our survey pretest
described different ways in which buying rms conrm their
suppliers strategic capabilities. For example, in the regular supplier selection and monitoring processes, buying rms typically
assess the development of key revenue and protability performance indicators over the past several years, compliance with
the latest ISO certications, and reports of technological competencies and capacities (e.g., through supplier self-reporting instruments) as proxies for such capabilities.
We expect that investments in the development of suppliers
environmental standards positively affect the general strategic
capabilities of these suppliers. Contrary to some types of supplier
development (e.g., logistics-centered development projects that
do not necessarily intervene in a broad way with the suppliers
production technology), upgrading a suppliers environmental
performance often entails broader technological intervention.
It typically requires helping the supplier use technologies and
production processes that are more advanced and that specically
allow for improvements such as lower emissions footprints, more
efcient energy use, and/or better waste management (Klassen
and Vachon 2003). For example, BASFs eco-efciency development project with emerging economy suppliers involved a systematic modernization of the suppliers production systems; it
started with an analysis of the suppliers current status using
BASFs proprietary diagnostic tools and included consulting on
process and technological improvements throughout the suppliers systems by BASFs production experts (UNIDO 2004). Both
the outlined reasoning and the BASF example align with the
contentions of the RBV. Specically, Hart (1995) and Waddock
and Graves (1997) nd that adherence to high environmental
standards often requires the development of superior management and technology resources, including advanced manufacturing technologies and efcient and tightly controlled processes.
These resources allow not only for better environmental performance but also for higher product sophistication and innovation
capabilities. Hence:
135
H4: Environmental supplier development is positively

related to suppliers strategic capabilities.
Buying rm environmental reputation
We conceptualize the environmental reputation of the buying
rm as the degree to which it is perceived as being environmentally sound by the market, that is, mainly by the rms customers
and industry-relevant media (the latter being, e.g., trade journals,
industry reports, sustainability agencies, or any other communication informing the decision making of the rms customers).
Such a reputation for environmental concern and expertise represents a hard-to-imitate resource (Russo and Fouts 1997) and thus
a differentiator from the competition.
Purchasing activities represent a signicant part of rms value
chains, and for many companies, emissions and other environmental hazards created in the upstream supply chain (as well as
resulting reputational risks) are far greater than those in the buying rms own production. Of course, environmental supplier
development does not necessarily lead to consistently high environmental standards across all of the buying rms suppliers
(given that supplier development programs typically address only
part of a buying rms supplier portfolio) (Bai and Sarkis 2010).
Nevertheless, it still can have a positive effect on the buying
rms environmental reputation because the high resource commitments that are involved (Bai and Sarkis 2010) might allow
the rm to be perceived as industry-leading in environmental
engagement as well as to signal a strong commitment to environmental causes and the lowering of environmental risks in the
supply chain. Empirically, Toms (2002) corroborates these
expectations. Using a sample of 126 U.K. rms, he nds that
environmental efforts are particularly effective for building an
environmental reputation when they involve projects that competitors cannot easily duplicate, thus preventing them from making comparable claims about their own environmental
performance. Similarly, Hasseldine et al. (2005) nd that a rms
environmental reputation can be more effectively formed by a
smaller number of complex, highly resource-committing activities than by a larger number of easier efforts. Because environmental supplier development closely matches this more complex
activity prole, we hypothesize:
related to a buying rms environmental reputation.
Organizational learning in supplier management

We conceptualize the extent of organizational learning in supplier management as the degree to which the buying rm
improves its ability to effectively cooperate, coordinate, and integrate with suppliersin our case, from emerging economies
(Carter 2005; Ehrgott et al. 2011). In other words, it describes
the extent to which the rm is able to use its interactions with
emerging economy suppliers to acquire better skills for generally
managing the corresponding relationships. In the sense of March
(1991) and Barney (1991), such learning occurs when knowledge
136
is accumulated over time and is stored by organizations in their

procedures, rules, and social relationships.
Environmental supplier development efforts typically intervene with larger parts of suppliers production technology (contrary, e.g., to joint logistics projects, which typically include
much less of such intervention). Also, it typically requires that
a relatively large number of experts from the buying organization (e.g., engineers from the production function and experts
from the logistics and R&D units) spend signicant time at the
suppliers site. Schaefer and Kosansky (2008) and Paulraj
(2011) argue that such a cross-functional collaboration is a key
component of sustainable supply management. Moreover, environmental supplier development projects might allow the buying
rm to understand its suppliers mindsets beyond the mere
transactional business context (e.g., beyond a mere awareness
of typical quality- and contract-related specics). In particular,
the buying rm might have the opportunity to gain insights into
the suppliers broader political and legal environment (e.g., into
the local environmental regulatory requirements and societal
expectations). For example, the environmental development project conducted by Pentland and Nike with smaller and mediumsized suppliers in Vietnam involved a complex partnership
approach in which managers from the two multinational enterprises came together with local government partners, the local
Chamber of Commerce and Industries, the International Leaders
Forum, and the Mekong Development Facilities, among others,
not only to help individual suppliers but also to discuss gaps
between local regulation and internationally accepted standards
(UNIDO 2004). This sort of intense interaction, in turn, allows
the buying rm to enhance its familiarity with and condence
in emerging economy market environments and to gain insight
into the processes, strengths, and weaknesses of the supplier. In
other words, the buying rm builds skills that allow it to more
quickly identify and react to the typical issues that arise when
sourcing from business partners in emerging regions. Empirically, little light has been shed on the role of organizational
learning as an outcome of environmental sustainability in the
supply chain. In one of the few existing studies, Carter (2005)
investigates purchasing managers and executives in U.S. consumer products manufacturing organizations and nds a positive
link between environmental (and social) activities by the purchasing function and organizational learning. This corroborates
our expectations about a positive link between environmental
supplier development and organizational learning in the buying
rm. Hence:
related to the extent of organizational learning in supplier management.
METHODOLOGY
Sampling and data collection
To collect the studys empirical data, we used a mail questionnaire sent to a random sample of 1,500 U.S. companies and
1,000 German companies from the manufacturing, construction,
M. Ehrgott et al.
and retail industries (SIC codes 1517, 2039, and 5059).1 We

chose these particular industries based on their high exposure to
environmental issues. Firms had to have at least 50 employees
and annual sales of at least USD 10 million. We used this criterion to ensure a focus on medium- and large-sized companies,
which are more likely than small-sized rms to have direct relationships with emerging economy suppliers.
To dene the scope of sourcing countries, we used a
comprehensive list of emerging economies provided by the
Forbes-accredited Euromoney Institutional Investor Company
(Ehrgott et al. 2011). Its database, ISI Emerging Markets, identied 72 countries as emerging economies. We discussed this
portfolio of countries in the preinterviews before the launch of
our data collection. To accurately reect the actual emerging supply markets relevant for U.S. and German companies, the purchasing managers participating in the pretest suggested some
modications to this country list. (See Appendix 1 for the resulting portfolio of 50 sourcing countries as it was presented to the
respondents in the nal questionnaire.) Analyses of the collected
data show that, on average, 60% of the purchasing volume that
the participating companies source from emerging economies
was from Asia, followed by 30% from Eastern Europe, and 10%
from Latin America.
Both U.S. and German respondents received an identical questionnaire in the English language. This approach was possible
because the high-level position of the targeted key informants
(and the job requirements of such a position) ensured that all survey respondents were procient in English. Testing for measurement equivalence between the two country samples conrmed
that understanding of the items and constructs did not differ
between U.S. and German respondents. (See the Scale Development section for further details.)
We received 107 usable questionnaires from U.S. rms and
137 from German companies. Of the complete sample, 508 U.S.
companies and 138 German companies either replied that they
did not purchase from emerging economies or could not be
reached because of invalid contact information. Reducing the
sample by these gures resulted in an overall effective response
rate of 13.2% (244/1,854). Appendix 2 provides an overview of
the sample demographics.
Nonresponse bias
To ensure the robustness of the results against nonresponse bias,
we performed two different tests. First, we conducted a multivariate t-test to compare the answers of early respondents with those of
late respondents of our survey (Armstrong and Overton 1977;
Wright and Armstrong 2008). We found no difference between
early and late respondents. Second, we sent an abbreviated questionnaire to initial nonrespondents (Lambert and Harrington 1990).
To ensure the highest possible number of responses, we also made
follow-up phone calls. In total, we obtained 20 new responses and
compared these with the original sample by calculating another
multivariate t-test. No signicant differences emerged between
respondents and nonrespondents.
1
This sample resulted from the same data collection effort that
is the basis of Ehrgott et al. (2011).
Key informant issue

We addressed our survey to the respective purchasing heads of
our sample companies. The existing literature suggests that
higher level purchasing executives are key informants for surveys
on global sourcing and sustainability topics (Carter 2005; Ehrgott
et al. 2011) because these managers typically have detailed
knowledge of sustainability standards in their rms global supplier management and, at the same time, are able to judge both
the various antecedents behind these efforts and the performance
dimensions measured through the outcome constructs of our
study. To ensure that respondents were actually knowledgeable,
the questionnaire included an assessment of the respondents
ability to answer the respective scale items. It captured the
respondents experience in the purchasing function (in years), the
degree of involvement in the rms supplier management activities, and the level of involvement in the purchasing functions
sustainability activities (the latter two measured on a Likert-type
scale ranging from 1 for somewhat involved to 7 for very
involved). Respondents average experience in the purchasing
function was 9.1 years, average involvement with supplier management activities was 6.2 on the scale, and average involvement
with their rms sustainability activities was 5.9 on the scale.
Common method bias
To reduce the risk of common method bias, items assessing the
focal construct, environmental supplier development, were presented rst in the questionnaire, followed by items measuring the
presumed antecedents, followed by the presumed outcomes (Podsakoff and Organ 1986). Each of these three sets of items was
assessed in separate sections and on separate pages of the survey.
We also employed the single-method-factor approach of Podsakoff et al. (2003) to test the data for potential common method
bias. To this end, we added an additional latent construct to the
structural model, to which all items in the model were connected
as indicators. The addition of this construct did not make any
previously signicant paths insignicant or any previously insignicant paths signicant. Thus, the test does not indicate a bias
resulting from common method variance.
Scale development
The measures used in this study are based on existing scales, to
the extent possible. However, all existing scales had to be modied to t the emerging economy context of the study. The constructs covering environmental pressures from customers, the
government, and middle management employees were based on
the work of Carter and Jennings (2004). The focal construct
environmental supplier developmentwas based on Krause et al.
(1998), Rao (2002), and Rao and Holt (2005). Operationalization
of suppliers strategic capabilities drew on a scale from Stump
and Heide (1996), the scales used to assess the buying rms
environmental reputation and the extent of organizational learning were developed through a comprehensive literature review,
as well as from interviews and pretests with purchasing managers
and supply chain scholars (also see Ehrgott et al. 2011 who use
the same scales for organizational learning in supplier manage-
137
ment and supplier strategic capabilities). All questionnaire items

were measured on a 7-point Likert-type scale ranging from
strongly disagree to strongly agree. We pretested the survey
with eight academics experienced in supply chain and sustainability research and with 11 supply chain managers, leading to
adaptations in the wording of some items.
We conducted a conrmatory factor analysis (CFA) to establish
our measurement model. After scale purication, we found an
appropriate model t with a v2/df ratio = 1.52, comparative t
index (CFI) = .97, Tucker Lewis index (TLI) = .97, goodness-oft index (GFI) = .90, adjusted goodness-of-t index
(AGFI) = .87, normed t index (NFI) = .93, composite reliabilities greater than or equal to .84, and a root mean square error of
approximation (RMSEA) = .046, all meeting the required thresholds (Bentler 1989; Browne and Cudeck 1989; Hair et al. 1995,
2006; Hu and Bentler 1999). Furthermore, each scale item had a
factor loading of at least .40. All factor loadings were highly signicant (p < .0001), suggesting convergent validity (Gerbing and
Anderson 1988).
We assessed measurement equivalence across the U.S. and
German samples by performing a two-group CFA with all factor
loadings constrained to be equal across samples (Kaufmann and
Carter 2006). None of the constraints was signicantly different
from zero (p > .05), and the chi-square difference between the
unconstrained and constrained models was insignicant
(v2 = 19.996, df = 16, p > .05), suggesting measurement equivalence across the two samples. Appendix 3 provides an overview
of the nal scales and the respective measures of reliability and
validity.
Control variables
We tested the robustness of our model by introducing ve control
variables: rm size, people-oriented organizational corporate culture, corporate environmental strategy, industry, and share of purchases from emerging economies. These variables have been
identied by the existing body of literature as potential inuences
in sustainability contexts. Including these variables made no previously signicant path insignicant and no previously insignicant
path signicant.
Stakeholders perceptions of a rm may be inuenced by the
rms size (Gonz!alez-Benito and Gonz!alez-Benito 2006). Larger
rms may be better known and more observable, leading to
heightened stakeholder attention. We use annual business unit
sales as a proxy for rm size.
Because of differing resource requirements in the upstream
supply chain, the relevance of environmental supplier development may vary between industries (Gonz!alez-Benito and
Gonz!alez-Benito 2006). Correspondingly, awareness that buying
rms (and their stakeholders) in different industries have of their
suppliers environmental standards may also vary. To control for
such differences, we use a dummy industry variable.
Companies with higher purchasing volumes from emerging
economies might show a comparatively higher probability of
engaging in environmental supplier development because relationships with suppliers from these regions are more important
to them. To test for such effects, we include the share of purchases from emerging economies as a control variable, mea-
138
M. Ehrgott et al.
Table 1: Correlations between constructs

Construct
Middle mgmt environmental pressures

Government environmental pressures
Customer environmental pressures
Environmental supplier development
Organizational learning
Buying rm environmental reputation
Suppliers strategic capabilities
1
.468
.605
.537
.196
.253
.057
.283
.103
.133
.030
1
.365
.471
.107
1
.172
.039
1
.050
1
.550
.229
.084
.108
.024
Figure 1: Research framework and results of structural equation model.

Antecedents
Efforts
Outcomes
R2 : .01
Customer
environmental
pressures
H1
Suppliers
strategic
capabilities
H4
R2: .29
Government
environmental
pressures
Environmental
supplier
development
H2
R2 : .22
.37***
.58***
Middle mgmt
environmental
pressures
Buying firm
environmental
reputation
H5
.47***
H3
H6
R2 : .13
Organizational
learning
in supplier mgmt
Model fit: X2 /df = 2.159 CFI = .937 TLI = .927 GFI = .856 AGFI = .819 NFI = .889 RMSEA = .069
*: p<0.05; **: p<0.01; ***: p<0.001
Significant relationship
n= 244
Insignificant relationship
Note: The antecedent constructs are dened based on Ehrgott et al. (2011) but use separate survey items which operationalize these pressures as environmental, rather than social, stakeholder pressures. The suppliers strategic capabilities and the organizational learning in
supplier management constructs use the same data used by Ehrgott et al. (2011).
sured as a percentage of total purchasing volume in U.S. dollars/Euros for the U.S. subsample and the German subsample,
respectively.
When environmental sustainability is part of a rms overall
business strategy, middle managers might be encouraged to more
explicitly push for environmental projects. For the same strategic
reasons, however, the rm might also engage in environmental
supplier development (Carter and Jennings 2004), potentially
leading to endogeneity issues. We therefore control for the inuence of environmental rm strategy using the item, Our company makes environmental sustainability an integral part of its
business strategy, on a 7-point Likert-type scale.
Similarly, a people-oriented organizational culture has been
found to affect employee initiatives, as well as rms conduct concerning environmental issues (Carter and Jennings 2004). To control for such an inuence, we include a scale based on the work of
Chatman and Jehn (1994) and Carter and Jennings (2004) with the
following items: Our companys organizational culture is strongly
characterized by (a) being people-oriented, (b) fairness, (c) being
supportive, and (d) the desire to be a good corporate citizen.
Structural model analysis

We tested our hypotheses through structural equation modeling
(SEM). A power analysis to validate the adequacy of our sample
size (MacCullum et al. 1996) revealed a power for close t of
.999 for both our measurement and structural models (at a = .05
and alternate RMSEA = .08 and with underlying degrees of freedom [df] = 219 for the structural model and df = 207 for the
measurement model). These values exceed the commonly
accepted .8 threshold (MacCullum et al. 1996) and indicate sufcient statistical power to detect potential model misspecication.
In research using SEM, potential issues with multicollinearity
need to be considered (Kaplan 1994). Grewal et al. (2004) show
that effective testing for discriminant validity can largely screen
out these issues. Following these authors recommendation, we
assessed discriminant validity by examining the average variance
extracted for each construct and ensuring that it exceeded the
squared correlations with all other constructs (Fornell and Larcker 1981). The criterion was fullled in all cases. Furthermore,
we performed chi-square difference tests between a model in
which a factor correlation parameter was xed at 1.0 and the ori-
ginal unrestricted CFA model (Anderson and Gerbing 1988). A

signicantly worse t exists for the studys restricted versus
unrestricted models, also providing evidence of discriminant
validity. The correlations among the studys latent constructs are
shown in Table 1.
Figure 1 provides an overview of the results of the structural
model and the measures used to assess model t. All applied
measures indicated a very satisfactory t of the model to the
data, with the v2/df = 2.159, CFI = .937, TLI = .927, GFI =
.856, AGFI = .819, NFI = .889, and RMSEA = .069.
To ensure the robustness of our results, we tested for potential
differences between U.S. and German buying rms. We again
used a multigroup analysis, with all paths constrained to be equal
across samples. The chi-square difference between the unconstrained and constrained models was insignicant (p > .05), suggesting no difference in the results between U.S. and German
respondents. We next discuss the implications of these ndings.
RESULTS
Antecedents of environmental supplier development
One of the most noteworthy outcomes, shown in Figure 1, is the
dominant role of internal stakeholder pressures, specically, from
middle-level purchasing managers, as an antecedent force of environmental supplier development initiatives (H3). This result
corroborates the predictions of stakeholder theory that middle managers can use their salience to inuence the rms supplier development practices according to their environmental expectations.
Furthermore, these empirical results suggest that the rm can
strengthen its bond with middle managers by recognizing and
addressing middle management environmental values and expectations. Environmental supplier development apparently is chosen
by rms as a specic effort to demonstrate such recognition, likely
because it is a particularly proactive and resource-intensive initiative and can thus signal the rms value alignment with its middle
managers. This move appears especially plausible against the specic background of purchases from emerging economies. In these
regions, environmental standards among suppliers are often lower
than those in Western companies, and purchasing managers might
thus be spurred to push strongly for improvements.
Pressures from customers, on the other hand, do not emerge
as an antecedent to environmental supplier development (H1).
This evidence suggests that in cases where rms experience customer demands for environmental sustainability, they do not consider environmental supplier development to be an effective
response for delivering on such demands. One potential explanation might be that rms evaluate possible responses to environmental customer pressures through a costbenet lens
(McWilliams and Siegel 2001; Barnett 2007) and might conclude
that environmental supplier development is not the most costefcient alternative when they are confronted with customer
environmental expectations (e.g., compared to donations to environmental causes or acquiring environmental certications).
Furthermore, our results show no relationship between government pressure and environmental supplier development (H2), suggesting that rms do not consider environmental supplier
development to be an effective means to deliver on government
139
demands for environmental sustainability. Firms might in fact recognize that they can change their supplier portfolios relatively easily at a later point in time, as an immediate response to regulatory
changes (Ehrgott et al. 2011). The need for a proactive stance on
government regulation would thus be lower than expected. That is,
rms would not need to engage in costly environmental supplier
development, but instead would switch to better suppliers when
needed. Such switching is even likely to be relatively neutral in
cost, on average, in emerging economies because Western rms
still tend not to fully integrate with suppliers from these regions,
but rather to source commodities or simpler components from
them. Support for this view comes from Buysse and Verbeke
(2003), nding a positive governmental inuence only on environmentally reactive companies and not on environmentally proactive
rms.
Outcomes
The most striking nding with regard to outcomes of the rms
environmental supplier development is the highly signicant
links between supplier development efforts and both buying rm
environmental reputation (H5) and organizational learning (H6).
Apparently, environmental supplier development helps to build
a positive environmental reputation as it is perceived as an
extraordinary engagement that requires high resource commitments (Bai and Sarkis 2010) and demonstrates the buying rms
ability to manage complex environmental challenges in its
upstream supply chain. Our nding thus supports the work by
Hasseldine et al. (2005), suggesting that even a smaller number
of high-involvement supplier development efforts apparently is
able to augment the rms environmental reputation.
Based on our empirical evidence regarding organizational
learning, environmental supplier development efforts appear to,
in fact, lead to sufciently rich interaction between the purchasing department and suppliers, so as to generate strong learning
effects for the buying rm. Environmental supplier development
projects can require that many different experts from the buying
rm be involved at the supplier site for extended periods of time
(Carter and Carter 1998). As evidenced by the previously
described examples of BASF, Pentland, and Nike (Bethke and
Bluethner 2003; UNIDO 2004), environmental development projects in emerging economies allow for an exchange of thoughts
beyond the usual business context, providing a broader perspective of the suppliers political, legal, and social context in the
emerging region. This rich interaction gives the buying rm the
opportunity to gain deep insight into the business practices of
emerging economy rms and thus to enhance its overall ability
to manage relationships with business partners from these
regions.
In contrast, we did not nd a relationship between environmental supplier development and suppliers strategic capabilities
(H4). One explanation could be that the rm is not able to reach
a sufcient number of suppliers with such development efforts to
measurably affect the average capabilities of its supplier base (as
measured in this study). This thought is supported by the work
of Klassen and Vachon (2003), who do nd a positive effect of
collaborative environmental initiatives (e.g., supplier development initiatives) on supplier capabilities when they look at the
individual suppliers involved in such initiatives rather than at the
140
buying rms entire supplier portfolio on average. Alternatively,

the effect that environmental supplier development (e.g., in the
suppliers energy use or production technology) has on the capability of the individual suppliers could be too small to be
reected in a measurable way in the higher level strategic capabilities of the supplier. Potentially, investments required to realize improvements of a measurable magnitude would be
unattractive for the buying rm from a costbenet perspective
and are thus not undertaken.
THEORETICAL IMPLICATIONS
Overall, the R2 value of .29 for environmental supplier development indicates that stakeholder theory is a good lens for explaining antecedent forces inuencing environmental supplier
development. The dominant role of mid-level purchasing managers indicates that the relevance of internal stakeholders Ehrgott et
al. (2011) nd for the social sustainability and supplier selection
context can be similarly observed in the context of environmental
efforts in the supply chain. This suggests that the prevailing
focus the sustainability literature places on external stakeholders
(Carter and Carter 1998; Deephouse and Heugens 2009) is to be
expanded. In this, future research might address the question of
what actually motivates the rms middle managers to push so
strongly for environmental supplier development. A fruitful starting point for such research could be the work of Carter and
Jennings (2004), who found individual employee values to be a
strong antecedent to sustainability initiatives in the purchasing
function.
We did not nd relationships between customer and government pressures and environmental supplier development, leading
to two novel questions. First, do links exist between these groups
and other forms of environmental engagement in purchasing?
For example, rms might react to these pressures by engaging in
less complex forms of environmental efforts such as donations to
environmental causes or acquiring environmental certications.
Second, if higher levels of environmental customer and government pressures do not lead to signicantly higher levels of environmental supplier development, a critical topic for future
research is to explore what other antecedents are relevantand
why?
The literature on organizational learning in supply management contexts is still comparably embryonic and has so far
focused on identifying outcomes of such learning processes (Hult
et al. 2003). Our study complements this perspective by identifying a specic rm activitynamely, environmental supplier
developmentthat can lead to organizational learning. In addition, in relation to Carters (2005) nding that Purchasing Social
Responsibility (activities comprising diversity, the environment,
human rights, philanthropy, and safety) is related to organizational learning, and Ehrgott et al. (2011) who nd supplier selection involving social criteria to be one antecedent of
organizational learning, our ndings provide mounting evidence
that organizational learning and supply chain sustainability are
closely related and that organizational learning theory is a crucial
lens when studying outcomes of environmental efforts. Hence,
exploring a whole new set of questions appears worthwhile:
Does the extent of organizational learning differ with the charac-
M. Ehrgott et al.
teristics of the supply markets? Which organizational factors

moderate the learning process? How do characteristics of the
purchasing managers moderate the learning effect?
Finding a relationship between environmental supplier development and buying rm environmental reputation (with the latter
reecting customer perception next to media and industry perception) lends support to Deephouse and Heugens (2009), Hietbrink
et al. (2010), and Carter and Jennings (2004), who point to rising
customer awareness of corporate social responsibility (CSR)
issues in the supply chain. Interestingly, however, some scholars
nd contrary evidence in this regard. Particularly, Pomering and
Dolnicar (2009) and Auger et al. (2003) argue for limited customer awareness of CSR issues in real-life (i.e., nonexperimental)
settings. We recommend future research to further investigate
this dissonance in ndings and to more closely explore the contingencies under which customer awareness of sustainability
activities, and particularly of environmental efforts in the supply
chain, accrues.
Considering the broader RBV literature, there is a renascent
discussion on the relevance of resource-based thinking in supply
management contexts (Barney 2012; Hunt and Davis 2012).
Priem and Swink (2012), for example, raise the question about
the exact ways in which supply management practices can
strengthen the rms resource base. Our ndings add to the
debate for the specic case of environmental supplier development. On one hand, environmental supplier development does not
seem effective in augmenting the average quality of the rms
supplier base (as a rm resource). On the other hand, environmental supplier development does lead to organizational learning
and thus augments the rms capability to integrate with supply
chain partners from emerging economies. In this regard, our ndings lend support to the arguments of Swink et al. (2007) and
Chen et al. (2009), who write that having the ability to integrate
the supply chain (i.e., to develop relation-specic organizational
routines and knowledge) can be an important way by which the
supply function contributes to rms competitiveness.
MANAGERIAL IMPLICATIONS
The ndings from this study hold three primary implications for
management practice. Foremost, environmental supplier development proves to be an effective means of stimulating organizational learning in the purchasing function. It requires that
purchasing managers interact closely with suppliers in emerging
economy markets, as well as with various governmental and nongovernmental stakeholders in those markets and with different
functional areas and departments within their own rm. Thus,
they are able to expand their awareness of critical issues in these
supplier relationships. Admittedly, analyzing the complex network of constituencies and identifying those parties to be
involved in the environmental supplier development effort is a
complex task for management (Cantor et al. 2012). An approach
that has proven useful for such tasks in the context of joint
buyersupplier projects is process mapping (Parsley 2011). With
this method, the individual steps, decisions, and activities
required to achieve the desired environmental improvement of
the supplier are laid out and the interdependencies between them
visualized. For each stage and element of the process, parties
141
with key responsibility, parties that need to be consulted, and

parties that need to be informed are dened.
Second, environmental supplier development efforts can have
positive effects on the buying rms environmental reputation.
Customers appear to value extraordinary environmental efforts
like supplier development at a relatively high level and imagine
rms engaging in such efforts to be particularly environmentally
friendly. Firms that have environmental supplier development
programs are thus well advised to actively communicate with
their customers about them (e.g., by highlighting them in advertising material or as dedicated sections in their sustainability
reporting). Our nding that rms seldom use environmental supplier development as a response to environmental customer
demands suggests that the reputational benets of such efforts
have not yet been realized by many companies.
Finally, rms need to consider the inuential role that purchasing middle managers have on environmental efforts in the purchasing function. Accordingly, a rm that wants to excel with
regard to environmental efforts in its supply function is well
advised to consider personal environmental awareness and
engagement when recruiting or appointing new middle managers.
For those purchasing middle managers who are already in the
organization, but who lack experience with environmental projects, rms might consider providing dedicated training programs
that focus on environmental concerns in purchasing and supplier
management.
LIMITATIONS
Although our study sheds light on several antecedents and outcomes of environmental supplier development, we have focused
our investigation on nonnancial aspects. Specically, we have
not explicitly studied the nancial costs and benets of environmental supplier development. Notably, such costbenets can
accrue both on the side of the buying rm and at the supplier.
Incorporating such a perspective would allow for breaking new
ground along three lines.
First, it would allow for insights into the degree to which the
benets of environmental supplier development outweigh the associated costs and for a comparison of the cost-efciency of environmental supplier development with other forms of environmental
supply chain efforts. For example, when striving to lower the emissions level in the upstream supply chain, rms might consider an
array of possible levers beyond environmental supplier develop-
ment, including optimizing transportation logistics, switching to

geographically more proximate suppliers, or switching to suppliers
with efcient production technologies already implemented.
Second, it would contribute by shedding light on the yet largely
unanswered question of how the buying rm and the supplier can
share the costs and benets of environmental supplier development
for their maximum mutual benet. Because such studies require
detailed access to the buying rms cost and revenue structures, a
qualitative, case studybased investigation, rather than a largescale survey, would likely to be a more suitable approach. A conceptual starting point for analyzing the costs associated with environmental supplier development might be the work of Krause and
Wagner (2008), who discuss budgeting issues in supplier development and cost-sharing approaches between the involved parties.
Research in this area can also be informed by the literature stream
on costbenet sharing in other (often production efciency-oriented) types of buyersupplier collaboration, with the works of
Lockstr
om et al. (2010) and Riha and Radermacher (2009) serving
as fruitful points of departure.
Third, a consideration of the nancial costs and benets of
environmental supplier development would help provide insights
on the direct link between sustainability and nancial rm performance. So far, the search for such a relationship has yielded
inconclusive results. McWilliams et al. (2006) and Schuler and
Cording (2006) note that the large number of factors affecting
nancial performance make a measurable magnitude of such a
link unlikely. A more suitable approach to determine the contribution of environmental supplier development to the rms overall nancial success thus appears to be a monetary valuation of
the specic costs and benets produced by these efforts. With
buying rm environmental reputation and organizational learning
in supplier management, our study points to two benets that
future research should consider in such valuation.
The use of a single informant might represent another limitation of our study. Although we assessed the adequacy of this
approach previously, future research might still consider using
multiple informants. Especially in investigating the relationship
between environmental supplier development and buying rm
environmental reputation, a study that validates our ndings by
assessing the two constructs through different respondents would
be helpful, further ruling out the possibility of wishful thinking
or social desirability. In addition, multiple informants might also
be used to assess the buyers versus the suppliers perspectives
(e.g., Carter 2000).
APPENDIX 1
ALPHABETICAL LIST OF EMERGING SUPPLY MARKETS IN SCOPE (AS PRESENTED TO RESPONDENTS)
Eastern Europe
- Albania
- Armenia
- Azerbaijan
Asia
- Georgia
- Hungary
- Kazakhstan
- Romania
- Russia
- Slovakia
- Bangladesh
- China
- India
Latin America
- South Korea
- Sri Lanka
- Taiwan
- Argentina
- Brazil
- Chile
Continued.
142
M. Ehrgott et al.
Appendix 1: (Continued)
Eastern Europe
- Belarus
- Bosnia/
Herzegovina
- Bulgaria
- Croatia
- Czech
Republic
- Estonia
Asia
-
Kyrgyzstan
Latvia
Lithuania
Macedonia
Moldova
Poland
Slovenia
Tajikistan
Turkey
Turkmenistan
- Ukraine
- Uzbekistan
Indonesia
Iran
Malaysia
Pakistan
Philippines
Singapore
Latin America
- Thailand
- Vietnam
Columbia
Ecuador
Mexico
Peru
Trinidad
Venezuela
APPENDIX 2
SAMPLE DEMOGRAPHICS
Characteristic
Number of responses
Average rm size in sales per annum
Average # of employees
% Electronic rms
% Automotive rms
% Chemicals, pharmaceuticals, oil and gas rms
% Mechanical engineering rms
% Consumer goods rms
% Wholesale and retail trading rms
% Other rms
Average import ratio from emerging economies
U.S. subsample
German subsample
107
USD 6,659 M*
17,357
12.1%
13.1%
15.9%
18.7%
19.6%
4.7%
15.9%
23.46%
137
USD 6,734 M*
21,901
6.6%
16.8%
11.7%
19.0%
24.8%
6.6%
14.6%
29.19%
Note: * Converted into U.S. dollars using EUR-USD exchange rate at the time of survey.
APPENDIX 3
QUESTIONNAIRE SCALE ITEMSa,b,c
Customer Environmental Pressures
Our customers
set high environmental standards in their buying decision. (.94)
show strong awareness about environmental issues. (.94)
prefer purchasing from companies with a strong environmental image. (.91)
inform themselves about their suppliers environmental standards before buying from them. (.86)
Composite Reliability: 0.93, Cronbachs Alpha: 0.93, AVE: 0.772
Eliminated item (reason for elimination):
are likely to switch to our competitors if these outperform us in environmental aspects. (high internal correlation)
Government Environmental Pressures
Government/legal regulation in our industry
currently sets strict environmental standards. (.88)
is likely to increase pressure if our industry does not improve environmentally by itself. (.92)
actively pushes for environmental improvement. (.94)
Eliminated items (reason for elimination):
Continued.
143
is expected to increase pressure regarding environmental efforts within the next three years. (high internal correlation)
is lobbied by activist groups to increase environmental standards. (high internal correlation)
currently holds my company responsible for the environmental impact of our suppliers. (low factor loading)
Middle Management Environmental Pressures
The middle managers in our purchasing organization
show a personal sense of obligation towards environmental conduct. (.91)
want our company to be perceived as a leader in terms of environmental responsibility (e.g., by the public, customers, media, etc.).
(.91)
speak up if they feel our company can improve environmentally. (.90)
have started projects to enhance our companys environmental performance. (high internal correlation)
show initiative to advance environmental causes. (high internal correlation)
With regard to our existing portfolio of suppliers from emerging economies, we
advise them on technology that makes their production cleaner. (.89)
make efforts (e.g., joint projects) to show them how they can reduce waste in manufacturing. (.95)
make efforts (e.g., joint projects) to show them how they can use resources more efciently. (.94)
encourage them to continuously improve their emission levels (e.g., air or water pollution). (low factor loading)
commit resources to coach them on employing reusable packaging solutions. (high internal correlation)
continuously ask them to commit to waste reduction goals. (high internal correlation)
Suppliers Strategic Capabilities
Averaging over our total purchasing volume from emerging economies, our current suppliers from these regions show
high technical capabilities. (.85)
nancial strength. (.80)
good personnel and management resources. (.80)
high innovation capabilities. (.85)
Buying Firm Environmental Reputation
Our company
is perceived as a leader in terms of environmental responsibility by our customers. (.89)
is often referred to as a role model for environmental business practices by the media. (.91)
is seen as an innovator regarding environmental business practices in our industry. (.92)
is the preferred provider for customers who care about environmental issues. (high internal correlation)
has won awards for environmental merits. (high internal correlation)
Extent of Organizational Learning in Supplier Management
Interacting with suppliers from emerging economies enabled us to
develop skills to effectively coordinate with suppliers from such regions. (.84)
develop expertise to manage suppliers from such regions. (.90)
gain expertise that we can use across different countries in these regions. (.69)
learn more about doing business in these regions. (high internal correlation)
gain insights that are also useful for other functions of our rm. (high internal correlation)
Fit indices overall measurement model: v/df = 1.52; CFI = 0.97; TLI = 0.97; GFI = 0.90; AGFI = 0.87; NFI = 0.93;
RMSEA = 0.046.
Notes: AVE, average variance extracted.
a
Standardized factor loadings in parentheses.
b
All items were measured on a 7-point Likert scale where 1 = strongly disagree and 7 = strongly agree.
c
Respondents were told, This survey is targeted at companies that purchase from emerging economies. (The country list as shown in
Appendix 1 was provided at the end of the questionnaire.) They were instructed: You should only continue if your company buys part
of its total purchasing volume, including direct material, indirect material, and/or machinery & equipment, from emerging economies
(suppliers shipping plants should be located in these regions). Furthermore, they were asked If your company has more than one
business unit, please answer all questions with regard to your business unit only.
144
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147
SHORT BIOGRAPHIES
Matthias Ehrgott (PhD WHUOtto Beisheim School of
Management) is an Assistant Professor of International Business
& Supply Management at WHUOtto Beisheim School of
Management. His primary research stream focuses on sustainability issues in the supply chain, and his work has appeared in the
Journal of Business Ethics, the Journal of Purchasing & Supply
Management, and the Journal of International Management,
among others. For his doctoral research on social and environmental sustainability in supplier management, Dr. Ehrgott has
been honored by the Council of Supply Chain Management Professionals (CSCMP) with the Doctoral Dissertation Award. Dr.
Ehrgott is a member of the editorial review boards of the Journal
of Operations Management and the Journal of Supply Chain
Management and has several years of experience in industry.
Felix Reimann (PhD WHUOtto Beisheim School of Management) is an Assistant Professor of International Business at
WHUOtto Beisheim School of Management. His primary
research stream focuses on sustainability issues in emerging
economy contexts, and his work has appeared in the Journal of
Business Ethics, the Journal of Purchasing & Supply Management, and the Journal of International Management, among others. Dr. Reimann is a member of the editorial review board of the
Journal of Supply Chain Management and has several years of
experience in industry, particularly in Asia and Europe.
Lutz Kaufmann (PhD University of Giessen) is a Professor of
International Business & Supply Management and member of the
Supply Chain Management group at WHUOtto Beisheim
School of Management. He is also an Associate Fellow of Said
Business School at Oxford University, UK. His research has been
published in the Journal of Business Logistics, Journal of Operations Management, Journal of Purchasing & Supply Management,
Journal of International Management, Journal of World Business,
Journal of International Marketing, Journal of Business Ethics,
International Journal of Physical Distribution & Logistics Management, and Journal of Supply Chain Management, among others. Dr. Kaufmann is the European editor of the Journal of Supply
Chain Management.
Craig R. Carter (PhD Arizona State University) is a Professor of Supply Chain Management at Arizona State University.
His primary research focus is on sustainable supply chain management, which encompasses ethical issues in buyersupplier
relationships, environmental supply management, diversity sourcing, perceptions of opportunism surrounding electronic reverse
auctions, and the broader integrative concepts of social responsibility and sustainability. He is a member of the editorial review
board of several journals, an associate editor of the Journal of
Business Logistics and Journal of Operations Management, and
the co-editor-in-chief of the Journal of Supply Chain Management. His research has appeared in numerous supply chain management journals, including the Journal of Business Logistics,
Journal of Supply Chain Management, Decision Sciences, and
Journal of Operations Management.

Managing the Innovation Adoption of Supply Chain

FinanceEmpirical Evidence From Six European Case Studies
David A. Wuttke1, Constantin Blome2, Kai Foerstl1, and Michael Henke1
1
2
EBS University of Business and Law

Universit!e catholique de Louvain (UCL)
ogistics contribution to corporate performance has increased over recent years, particularly due to supply chain innovations. Opposed to
common innovations focusing on the improvement of product or information ow, supply chain nance (SCF) targets the nancial ow
and allows buying rms and their suppliers to improve working capital and reduce costs. However, the adoption process of SCF is complex
and rather unexplored in academia. This article provides an early step in building knowledge about SCF and in particular how rms adopt SCF,
why they adopt differently, and what role suppliers play in the adoption process. The objective was therefore to close the gap between our
knowledge on product and information ow oriented innovations and nancial ow innovations along the supply chain, namely SCF. For this
explorative research, we opted for an inductive multiple case study approach with six European rms. Based on our ndings, four sets of propositions are posited and an extended SCF adoption framework is proposed revolving around the interrelated adoption processes of buying rms
and their corresponding supplier bases.
Keywords: supply chain nance; innovation adoption; upstream innovation; case studies
INTRODUCTION
It is widely acknowledged that superior logistics management is
a crucial driver of rm performance (Ellram 1991; Bowersox and
Closs 1996; Mentzer et al. 2004; Fugate et al. 2010). Several
innovations such as bar codes, radio frequency identication,
cross-docking, and just-in-time delivery helped to grow the strategic impact of logistics management. Each of these innovations
supported specic rms to outcompete competitors, with prominent examples such as Walmart, Zara, Amazon, Toyota, and Dell
(Chopra and Meindl 2012). The scope was traditionally limited
to managing physical inventory and information ows, whereas
paying less attention to innovations in the third logistical ow,
the nancial ow of supply chains.
Lately, we have seen several rms tapping into the eld of
supply chain nance (SCF) as practitioner reports show (Aberdeen Group 2006, 2007; Demica 2007). In such reports, it is
claimed that even one of seven rms actively uses SCF (Aberdeen Group 2007), as the need to harmonize nancial and physical ows in European supply chains has been substantial, even
already before the nancial crisis (Castill!
on and Petit 2008). SCF
provides a pathway not only out of short-term liquidity dilemmas
but also toward a reduction in the long-term nancial burden in
the supply chain represented, for example, by the total amount of
necessary liquidity in a supply chain. The necessary liquidity is
lower with a coordinated nancial ow across the supply chain
than in the uncoordinated case (Protopappa-Sieke and Seifert
2010), especially leading to high savings when buyers and suppliers have different credit ratings (Pfohl and Gomm 2009).
David A. Wuttke, Institute for Supply Chain Management, Procurement and Logistics (ISCM), EBS University of Business and Law,
EBS Business School, Konrad-Adenauer-Ring 15, Wiesbaden
65187, Germany; E-mail: David.Wuttke@ebs.edu
Only recently, scholars also started to emphasize the importance of managing nancial ows along supply chains (Bowersox and Closs 1996; Mentzer et al. 2001; Hofmann and Kotzab
2010; Gupta and Dutta 2011) and to address research topics with
adjacent focus, for example, Protopappa-Sieke and Seifert (2010)
on the interrelation of operational and nancial performance
measures in inventory control. Likewise, Hofmann (2009) studies
inventory nancing from a logistics service provider perspective
and Pfohl and Gomm (2009) and Gomm (2010) review and conceptualize different approaches of nancing supply chains. A conceptual approach is also provided by Hofmann and Kotzab
(2010) who study collaborative working capital management and
particularly cash management in supply chains. However, empirical knowledge about this new phenomenon of SCF is nascent,
which can be explained by the mere fact that the SCF innovation
only recently emerged and empirical research can only analyze
existing practices and phenomena.
In practice, the innovation of SCF is considered to be an
established structure founded on an agreement between a buying
rm with its bank, stating that any supplier whose invoice has
been released by this buying rm can obtain a credit from the
bank for the period of the payment terms against the buying
rms credit rating (e.g., Demica 2007). This process is often
automated through an electronic platform providing all involved
parties with real-time visibility into the relevant nancial transactions. Particularly in Europe, SCF offers some innovative aspects
opposed to related practices such as reverse factoring, which are
intensively used in emerging economies (Klapper 2006).
Figure 1 illustrates the differences of a transaction without and
a transaction including SCF indicating also the novelty of the
process. This gure depicts the basic mechanism of SCF as we
analyze it in this article. As we shall discuss in more detail along
the case analyses, there are some differences among buying rms
regarding the SCF implementation. For instance, buying rms
may prioritize cash ows over automatization by focusing rather
on the extension of payment terms. Another rm might prioritize
the provision of exibility to its suppliers and provide them with
Managing the Innovation Adoption of SCF
more transparency concerning the attainable short-term credit

lines also allowing them to lend only fractions of the outstanding
invoice volume. These differences are often manifested through
the implementation of SCF; for instance, a buying rm might
integrate the SCF platform into its enterprise resource planning
(ERP) system or rather use a banks website for each transaction.
To be clear, although scholars conceptualize further aspects of
SCF (e.g., Pfohl and Gomm 2009; Hofmann and Kotzab 2010),
we focus on this specic type of SCF implementation as this is
the most prevalent approach in practice. This enables us also to
limit the domain of our research in such a way that the units of
analysis are comparable. In the closing section of this article, we
suggest how the ndings of this specic approach are connected
to different ways of managing nancial ows along the supply
chain.
The numerical example in Figure 1 illustrates the available
benets to both parties. In this case with an interest rate spread
of 5.5% between the supplier and the buyer, SCF can reduce the
capital costs for the supplier by 25% and lead to an additional
saving of 50% in respective capital on the buyer side. Pfohl and
Gomm (2009) come to similar conclusions in their conceptual
work, but with a stronger focus on the risk reduction mechanisms available from adopting SCF in a broader sense. It can
thus be concluded that the nancial benets available from SCF
motivate its spread even though its adoption and implementation
is complex and organizationally challenging (Seifert 2010).
Besides these valuable insights into the mechanics and advantages of SCF as well as adjacent practices, it appears that literature has so far overlooked the organizational perspective of
implementing SCF, in particular, the SCF innovation adoption
process. Even though new concepts do not as such automatically
qualify as innovation, it can be concluded from extant innovation
research that the concept of newness is considered the common
149
denominator of the wide array of denitions available for the

term innovation provided in the scholarly community. Thus,
we dene innovation as any idea, practice, or material artifact
perceived to be new by the relevant unit of adoption (Zaltman
et al. 1973, 8).
In the domain of innovation management, it is common to distinguish between product and process innovations (Johannessen
et al. 2001). As SCF is a new way of organizing the nancial
ows along the supply chain that does not affect the tangible
product among supply chain partners as such, it qualies as process innovation. Moreover, SCF has a signicant effect on the
unit of adoption, namely the buying rms and their suppliers, as
SCF processes undergo a considerable adjustment during the
innovation adoption process; therefore, the buying rm becomes
the level of analysis in our study.
Furthermore, SCF reveals a unique upstream dissemination
challenge toward suppliers as opposed to the landmark supply
chain innovation literature typically focusing downstream innovations toward (end-) customers (e.g., Flint et al. 2008). The main
difference lies between a buying rm that markets an innovation
to its suppliers and one that markets an innovation to its customers, as we will discuss in detail in the conceptual framework.
Thus, an upstream focus seems inevitable to understand the SCF
adoption process from an innovation perspective. Hence, in this
research we seek to contribute to the hitherto limited insights on
the coordinated management of nancial ows in the eld of
logistics and on the implementation of SCF from an upstream
buying rm perspective in particular, and to upstream innovation
literature in general.
For academia and practice, the adoption of nancial logistics
innovations is new. Therefore, we use an explorative multiple
case study approach to build knowledge on how rms manage
the SCF adoption process. This approach allows us to gain multi-
Figure 1: Supply chain nance (SCF) mechanism contrasting (A) transaction without SCF and (B) with SCF. Numbers are an illustrative example.
150
faceted perspectives that are necessary to understand the complexities of the innovation adoption process. In particular, we
address the following research questions:
How do buying rms adopt the SCF innovation?

Why are certain rms more effective during this innovation
adoption process?
How is the upstream supply chain involved in this innovation
adoption process?
By addressing these research questions, we make several contributions to research and practice. First, we provide in-depth
insights into the adoption of the innovative SCF process which
also provides further insights into upstream innovation diffusion
processes, highlighting necessary adjustments to the inuential
innovation adoption framework of Rogers (2003) to account for
the specicities of upstream innovations. Practitioners can gain
know-how on the SCF implementation process from an internal
and an upstream supply chain perspective reducing uncertainty
on how to implement SCF. Finally, we provide an empirical contribution to the emerging eld of research on the interface of
logistics and nance.
The remainder of this article is structured in six sections. First,
we present the literature review on SCF and (upstream) innovation adoption, concluding with our research framework. Subsequently, we describe our multiple case study method. Next, we
present the results of our cross-case analysis based on which we
developed testable propositions extending our initial research
framework. We conclude the article by discussing its theoretical
and practical implications, pointing to its limitations and suggesting paths for further research.
LITERATURE REVIEW AND CONCEPTUAL
FRAMEWORK
Two literature streams inform our research: (1) literature on the
logistics and nance interface and (2) relevant literature on upand downstream innovation management and organizational
innovation adoption.
SCF can be localized in the literature stream on the interface
between logistics and nance, which only recently gained
increased attention (Gupta and Dutta 2011). Most research has
thus far focused on conceptual work. For instance, Gomm
(2010, 135) denes SCF as a process optimi[z]ing the nancial
structure and the cash-ow within the supply chain, whereas
Grosse-Ruyken et al. (2011, 15) follow Camerinelli (2009) and
Pfohl and Gomm (2009) in dening SCF as an integrated
approach that provides visibility and control over all cash-related
processes within a supply chain. Our denition takes an
upstream supply chain perspective and focuses on the organizational structure to be implemented between the involved parties
to achieve visibility and control and to recurrently take cash ow
optimizing actions as outlined by the denitions presented
above.
Even though we tackle an empirical research phenomenon
there has been a rise in formal analytical modeling papers
informing our research on the logistics and nance interface
(e.g., Buzacott and Zhang 2004; Berling and Rosling 2005; Cal-
D. A. Wuttke et al.
dentey and Chen 2009). For instance, Protopappa-Sieke and Seifert (2010) analyze the interrelation of nancial and logistics
decisions within a supply chain indicating that improved
upstream cash ows may reduce suppliers nancial constraints
and thus improve physical ows. In addition, Shang et al. (2009)
study coordination schemes within supply chains and state that
SCF platforms provide the technology of applying such coordination mechanisms indirectly affecting logistics performance.
Although these models indicate that SCF has further benets
besides pure reductions of capital costs, they do not reveal
insights on how the SCF innovation can be established and disseminated by the buying rm. Hence, our article focuses on a
hitherto unexplored aspect of SCF.
The second stream informing our research on innovation adoption dates back to Ryan and Gross (1943) revealing that individuals face an innovation-adoption process consisting of several
stages of decision making (Ettlie 1980; Rogers 2003). According
to enhancements of these models, organizational innovation decision units must complete sequential process stages to nally
adopt an innovation (Meyer and Goes 1988; Rogers 2003). Analyzing innovation decisions along such frameworks has several
merits. In particular, by analyzing these stages separately, it
resolves the problem that some structural variables, such as centralization and organizational slack, may have a positive as well
as negative impact on the innovativeness of a rm (Rogers
2003). Furthermore, such models help to classify organizations
in more detail than by purely building upon the distinction of
adopters versus nonadopters (e.g., Meyer and Goes 1988; Fichman and Kemerer 1997). Therefore, in principle, such models
also inform the SCF adoption process. Particularly, the frequently
cited Rogers (2003) framework as depicted in Figure 2 appears
to serve as an appropriate foundation for structuring our research,
as it is generic enough to be transferred to SCF, but specic
enough to show how stages are interrelated, even though it
addresses predominantly organizational innovations opposed to
the upstream innovation in our case of SCF.
Moreover, the framework does not require the research team
to distinguish the degree of newness of SCF to the buyer and its
suppliers. The SCF concept might be initially new to the buying
rm and to early adopting suppliers, yet as the buying rm
reaches the routinizing stage (see Figure 2) and more suppliers
adopt SCF, the degree of newness to the buying rm decreases
until it becomes an established structure of buyersupplier relationships. Still, in the routinizing stage, the SCF innovation may
be new to late-adopting suppliers that board on to the already
established SCF platform of the buying rm (cf., Johannessen
et al. 2001).
Nevertheless, it is important to highlight the specicity of the
SCF innovation adoption by presenting to what extent ndings
from previous innovation research streams are or are not transferable to the SCF context. First, most of the innovation adoption
models were designed and tested in a within-rm context without
considering the upstream buyersupplier interfaces (Meyer and
Goes 1988; Ettlie and Reza 1992; Rogers 2003). Still, a specic
stream of research focused on the benets available from managing business processes across entities of the supply chain for faster product innovations, also termed design chain management
(e.g., Twigg 1995), or supplier involvement in new product
development (NPD) (e.g., Van Echtelt et al. 2008). Authors in
151
Figure 2: Innovation adoption stage model adapted from Rogers (2003, 421).
this eld identied collaboration between developers of buyers

and suppliers to be a particular driver of innovation project success. Although these ndings inform our research, the involvement of suppliers in NPD is distinct from the involvement of
suppliers in the SCF adoption as in the case of NPD the focus is
still placed on downstream innovations. Supplier involvement in
NPD directly affects the value of the product received by downstream customers, whereas SCF does not directly affect customer
value as it does not lead to adaptations in the product properties
or the production processes (Cooper and Kleinschmidt 1995;
Mills et al. 2004). Regardless of the targeted direction of the
innovation along the supply chain, there seem to be modes of
mutual adjustment in the conguration of interorganizational
NPD relationships that inform our research (cf., Bensaou and
Venkatraman 1995; Ragatz et al. 1997).
Second, previous innovation adoption studies with the focus
on the downstream dissemination of product or process innovations (Kim 2000) often took a perspective from the innovator to
the customer (Cooper and Kleinschmidt 1995; Menor et al.
2002). Consequently, the innovator should take the actions of
customers as target adopters into account. The particular merits
for innovation project success of early customer involvement in
downstream-focused innovation projects have been proclaimed,
among others, by innovation management scholars (e.g., Neale
and Corkindale 1998; Gruner and Homburg 2000). However,
having established that the innovation dissemination does not lie
downstream but upstream in the supply base of the buying rm
(the innovator), knowledge on customer involvement might be
partially applicable when involving suppliers (e.g., Kaulio 1998;
Karkainen et al. 2001), but is not seamlessly transferable to the
SCF adoption context due to the different roles of customers and
suppliers in the supply chain setting. Thus, SCF is a specic
innovation where the direct suppliers of the buying rm actually
become the target customers or target adopters of the process
innovation. The adoption process of the buying rm cannot be
completed without a substantial proportion of its suppliers also
adopting SCF. Therefore, the decision is not only to be made
within an isolated organization, but rather between the buying
rm and its supply base.
To conclude, we decided to equally take up- and downstream
dissemination research into account while gaining eld data to
extend the Rogers (2003) framework of innovation adoption for
our specic case of SCF. In particular, the Rogers framework
serves as a starting point for our analytic case selection because
it enables us to structure the multiple process steps of innovation
adoption decisions from the buying rms perspective. During
the cross-case analysis, adaptations to the model will be made
where necessary, in particular, when it comes to supplier interaction.
CASE STUDY METHOD

With this study, we seek to understand the adoption of the innovative SCF process, which bears yet unexplored mechanisms such
as the role of upstream supply chain members and functional collaboration between nance and logistics/procurement. In accordance with the purpose and research questions we posed, we
opted for a qualitative multiple case study approach as research
on how rms adopt SCF innovation is still in an exploratory stage
and the adoption is complex in nature as multiple functions are
involved (Eisenhardt 1989b; Ellram 1996; Meredith 1998; Wacker 1998; Gibbert et al. 2008; Yin 2009; Barratt et al. 2011).
Study design
The SCF innovation adoption process is our unit of analysis as
all three research questions revolve around the SCF adoption
from a buying rms perspective. Thus, we collected information
from buying rms which are our level of analysis.
Following the advice of Gibbert et al. (2008) and Yin (2009)
we accounted for construct validity, internal validity, external
validity, and reliability throughout our research process (see
Table 1). For instance, initially we interviewed key informants
from logistics, procurement, and nance because the adoption of
SCF often involves cross-functional teams consisting of these
functions. Building upon their responses, we requested further
interviews until we felt that we collected sufcient data in each
organization as additional interviews would not reveal further relevant data. This approach increased construct validity and internal validity, as it enabled us to triangulate different opinions and
thus to reduce biases. In total, 28 interviews were conducted.
Moreover, we used different data sources. Besides conducting
at least 4590 min long semi-structured interviews by the same
research team, we used questionnaires, secondary external data
such as trade publications or archival data, and focus group
meetings. These additional data sources were necessary to understand the rm-specic SCF approaches and helped to obtain a
realistic image during the data analysisfor instance, in the
intra-case analysis as summarized in the Appendix. In this way,
we opted for increased construct validity (Gibbert et al. 2008;
Yin 2009). Further techniques are summarized in Table 1.
Case selection and data collection
Following Seawright and Gerring (2008) as well as Eisenhardt
(1989b), we used a two-step approach of analytical sampling. First,
we tried to obtain a rather homogeneous empirical target group
with respect to size (only large rms), business activities (only production rms), and origin (Europe) as they all face comparable
152
D. A. Wuttke et al.
Table 1: Validity measures

Design
Case selection
Data gathering
Data analysis
Construct
validity
Building questions on research

framework derived from
innovations literature
No questions asked, which
involve broad speculation
Not applicable
Data triangulation based on

independent sources
Data analysis in parallel to
interview phase to be
receptive to new results
(Eisenhardt 1989b)
Internal
validity
Research framework derived

from well-established
related innovation diffusion
literature (Rogers 2003)
Not applicable
Multiple sources:
Questionnaires, semistructured interviews,
databases, and reports
Tandem interviews whenever
possible to reduce biases
Condentiality and
anonymity ensured
Multiple respondents
Most knowledgeable key
informants for SCF
interviewed
External
validity
Comparative multiple case

studies
Analytical sampling and

inclusion of
nonadopters to reduce
pro-innovation biases
(Abrahamson 1991)
Gathering data on the case

context
Selection criteria well

documented in case
study protocol, i.e.,
replication is possible
Semi-structured interview
guidelines reported in case
study protocol
All interviews transcribed by
interviewers
Reliability Case study protocol according

to Yin (2009)
Case study database
(including observations and
transcripts)
Pattern matching among cases

and model building
Active search for alternative
explanations
Theory triangulation with
diffusion of innovation
literature
Consideration of case context
(Johns 2006)
Extensive intra-case analysis
(Eisenhardt 1989b)
Pattern matching rather than
statistical projections used
(Gibbert et al. 2008; Yin
2009)
Independent researchers
followed Strauss and Corbin
(1990) approach and
discussed until convergence
of interpretation was
reached
Notes: References state where we adopted our procedure from. SCF, supply chain nance.
economical and regulatory environments and maturity of nancial

markets. Focusing on large rms is particularly appropriate when
practices are new (Koufteros et al. 2007); especially as small rms
would unlikely aim for automated SCF payment solutions, rather
large buying rms have so far implemented SCF. Finally, small
and large rms face distinct organizational challenges and thus it
seems necessary to limit the sample to rms of similar size.
Second, our aim was to identify rms which are in different
stages of the adoption process to better understand particular
challenges in the adoption process. The aforementioned Rogers
(2003) framework provided us general guidance on the critical
dimensions for our sampling strategy. So, we deliberately
avoided having only rms which reached the routinizing stage of
SCF adoption and opened our sampling to rms which are in
earlier stages of the adoption process. This decision may appear
to be a small drawback in the later analysis as only few rms
had fully adopted SCF to provide insights into the nal stages of
the adoption process. But, in fact, we compensated for this drawback by studying the two full-adopter cases in-depth, which is
reected by the high number of interviews (12 out of 28) in
those two rms.
We chose this case selection strategy for three reasons: First,
it reduces the pro-innovativeness bias (Abrahamson 1991). As
previous studies pointed out, analyzing only successful adopters

shades an overly optimistic light onto innovations (Abrahamson
1991). Second, as with all innovations there is a steep learning
curve in SCF. This means that certainly re-innovations have
occurred since the rst adoption (Rogers 2003). Therefore,
including only those rms which have fully adopted would
imply capturing a state of the innovation dating years back. And
third, we witnessed that it is not impossible to obtain information
regarding initial decisions from rms having fully adopted SCF.
However, those rms which undergo the particular decision process at the very moment of data collection are better able to provide detailed, multifaceted insights which enhance the validity
and reliability of collected data.
We subsequently added more companies to the sample until
theoretical saturation was reached as further cases would have
added only marginal insights (Strauss and Corbin 1990). In adding further cases we followed Strauss and Corbin (1990) as we
selected new cases according to the criteria described above, but
also tried to identify cases which appeared to be the most interesting according to our tentative data analysis up to that point.
For instance, our analysis indicated that supplier involvement is
an important aspect of the redesigning phase. Therefore, we
included a company whose reputation is to collaborate closely
153
with suppliers in other processes, and in fact we also found that

this company is engaged in supplier involvement, providing us
valuable insights. For an overview of the individual cases and
their characteristics, please refer to Table 2 and Appendix. As
we promised anonymity to interviewees, we replaced company
names by Greek letters. Furthermore, we generalized job titles of
interviewees into the categories logistics manager, procurement manager, or nance manager.
our cases along Rogers (2003) framework of organizational

innovation adoption and refer to the Appendix for an intra-case
description. We will shortly address the initiation and decision
process to provide the whole background of our analysis,
although our analysis particularly focuses on the implementation
stage of the model (c.f., Table 3; Figure 2).
Coding
Progress in the initiation phase consisting of agenda setting and

matching (Rogers 2003) is predominantly explained by three
major categories, as our coding of interview statements reveals.
In particularly, we coded reasons as follows: Organizational culture (e.g., I would see us as a very traditional company. rm
Alpha), uncertainty avoidance (e.g., We are not sure, whether
SCF would really t in our case. We would need to see more
successful cases rst, rm Beta), and lack of top management
commitment (e.g., Other working capital projects got CEO
attention; SCF, however, did not, rm Beta). Both nonadopters
(Alpha and Beta) clearly show that their corporate culture is
shaped by tradition and continuation rather than a strong posture
toward innovative business models. In contrast, the rms already
implementing SCF (Gamma, Delta, Epsilon, and Zeta) are rather
innovative with lower risk aversion and strong top management
commitment for innovations.
The initiation of SCF shows similar diffusion patterns to
other studies analyzing organizational innovations. Buying rms
need to have certain generic strategic priorities to be interested
in SCF innovation (Rogers 2003). For instance, we learn that
rms need to focus on working capital improvements and stable supply chains simultaneously. Similar to previous organizational innovation studies the adoption decision process
incorporates top management (Alexiev et al. 2010) and advice
from cross-functional teams (Miron-Spektor et al. 2011). Furthermore, we learn that behavior of competitors serves as indication of the opportunities inherent to SCF leading rms to
imitative behavior (Semadeni and Anderson 2010). Although
this process is slightly different in each organization (Sydow
Our data analysis approach was based on Strauss and Corbin

(1990), as we used codes grounded in data. In this step, we integrated data obtained from all data sources discussed above
(Moran-Ellis et al. 2006). However, as concepts from related
research emerged, we adapted these (e.g., trust) to relate our
ndings with previous research (Eisenhardt 1989b; Mello and
Flint 2009; Yin 2009). Then, we pursued axial coding (Strauss
and Corbin 1990) by grouping codes into categories and trying
to match patterns among the cases (Yin 2009) to also causally
relate these categories.
Finally, we selected those relationships which reveal the most
interesting insights with respect to SCF for further analysis.
In this step, we challenged observations with existing theory
(e.g., Van de Ven 1986; Rogers 2003; Benton and Maloni
2005). During the whole analysis, we constantly iterated between
these three steps to probe the hypothesized relationships with
actual data to ensure that the higher level of abstraction remains
empirically valid. So, whenever necessary, we adjusted the tentatively assumed relationships. To illustrate our coding procedure,
we state explicitly how we coded the categories throughout the
rst part of data analysis. However, for brevity we excluded
these details in later stages of the article.
Data analysis
Having established the specicities of the SCF adoption in the
literature review, we will now outline the SCF particularities of
Initiation of and decision on SCF adoption
Table 2: Case demographics and stage relative to innovation-decision framework by Rogers (2003)
Cases
Alpha
Beta
Gamma
Delta
Epsilon
Zeta
Industry
Country
Size
S&Ps rating
First exposure to SCF
Highest management
level involved
State
Stage
Coatings
Netherlands
Large
BBB+
2010
Not applicable
Aviation
France
Large
BBB+
2009
Head of SC
Chemistry
Switzerland
Large
BBB!
2009
CPO
Pharmaceutical
Switzerland
Huge
AA!
2009
CEO
Chemistry
Germany
Huge
A!
2008
CEO
Automotive
Germany
Large
A!
2006
CEO
Initiation
Matching
(awareness)
Initiation
Matching
(potentially
rejecting)
1
1
1
Implementation
Restructuring/
redesigning
(evaluation)
1
2
3
Implementation
Restructuring/
redesigning
(piloting)
1
1
2
Implementation
Clarifying
(on-boarding
of suppliers)
1
3
3
Implementation
Routinizing
(continuing)
# interviews logistics
# interviews procurement
# interviews nance
1
1
1
1
2
2
154
D. A. Wuttke et al.
Table 3: Quotes, codes, and categories derived from observations

Category
Codes
Original quotes
Redening
Benets allocation
Although the economic idea is the same in different SCF solutions we considered,
(to upstream
mechanism
they all differ in details. [] In the beginning, our priority was to nd a solution that
SC needs)
best ts our needs.
Degree of automation The system is very well integrated. [The supplier] uploads all required information to
the platform and we import these settings and simply ick a switch in our ERP
system., Suppliers have no longer issues with reconciliation as they always have
real time transparency whether we have released their invoices. Once we have done
so, they are informed automatically and can decide themselves when to get paid.
Scope of suppliers
We segment our suppliers and only target strategic or crucial ones. We do not intend
to onboard any leverage or opportunistic suppliers., As soon as the system was in
place, we tried to get as many suppliers on board as possible. However, those with
an annual spend below 200,000 are not interesting for our set-up. []
Restructuring
Cross-functional
We met weekly to discuss operational issues and twice a month with the whole SCF
collaboration
team., We needed to work very closely with our colleagues from nance and still
have formal weekly meetings., At the moment, we have a leadership team and we
discuss strategic SCF issues directly on top management level, It is crucial to
integrate operationalnot only strategicprocurement managers from the start on to
have better, immediate feedback from those who will work with the system.
Job design
Upstream supply chain managers initially said: Procurement managers initially said, it
is not our task to use SCF, it is not in our working contracts and job description. We
do not want to implement SCF
Performance
In our experience, SCF is likely to fail without changes of incentive structures., We
measurement
introduced working capital targets for direct and indirect materials. These were specied
at category level. There are different ways how logistics managers may achieve these
targets, but it is clear to date that working capital optimization and thus SCF adoption
along the supply base are among the most important ones.
Technology
It was quite tedious to adjust our ERP system to t to the SCF platform offered by the
[bank]. In total it took probably half a year., We developed a new payment platform
internally, anyway. When we learned about SCF, we discussed with our bank how we
could adjust our systems to become fully compatible. That was actually not too
complex., Moreover, we had to develop software internally and adjust our systems.
[] but in total, these efforts where not signicant.
Supplier
Suppliers opinions
We started recently two pilot projects in two European countries., We rst thought,
involvement
included in
SMEs would be primarily interested in participating [], but interestingly we were
decision making
wrongthat surprised us. In contrast, another suppliera large rmwas much more
eager to join the system, particularly due to off-balance sheet effects., We used the
experience gained in these pilot countries to improve our SCF solution to t to a
broader population of suppliers.
Feedback
The feedback from suppliers helped us to focus on such benets and to better
taken seriously
address suppliers needs.
Timeliness
As soon as we recognized the importance of suppliers in the process, we tried to include them
in pilot studies. The feedback of these selected rms was used to push the project forward.
Dissemination Suppliers
In most European countries, suppliers have not heard of SCF. So we had to explain
become aware
it to them., As soon as the rst manager of a supplier says sounds great, we are
interested, we have a rst success.
Suppliers become
We really need to go there and persuade suppliers that were not involved at an early
persuaded
stage of the project. We have workshops with their CFOs and explain the concept indepth to persuade them based on the benets both parties can obtain, Sometimes we
use our market power to persuade suppliers.
Suppliers adopt SCF Well, you know it is nally great to see that you are successful with the project and
suppliers adopt it. Recently, two or three really important suppliers in terms of spend
volume agreed to use SCF.
Continued.
155
Category
Relationship
strength
Codes
Original quotes
Trust
Power
Communication
intensity
SCF leverage
Credit rating
Bank integration
Qualitative benets
Instead of us also the bank could approach our suppliers initially. However, suppliers dont
trust banks like they trust us. Due to long collaboration, these suppliers know us and once
we explain the idea, they say, okay, we are interested in the benets.
If we have more power and if we perceive that SCF is benecial for both parties, we expect
our suppliers to extend payment terms but offer them SCF in advance, to ensure they have
cheap access to short-term liquidity., When we are talking with smaller suppliers, where
we account for 3050% of their sales, we simply tell them to use SCF.
We work very closely with our colleagues from nance when we conduct workshops with
suppliers. Our nance colleagues are very important to assure our credibility in these
workshops. They are our experts regarding nancial and accounting issues and the
suppliers participating in such workshops usually bring their CFO to the table.,
With smaller suppliers, we usually use written communication or a procurement
manager negotiates with them one-on-one. [] We will extend payment terms anyway.
It is up to youtake our SCF offer or leave it.
For sure, our strong credit rating was required. Without it, we could have never offered
such good conditions to our suppliers., In all ratings we are graded very well, so we
bring a strong cost reduction argument to the table.
Our bank trusts us. We work together with them since more than 100 years and they know
our records and how we conduct business., Well, actually we are very grateful to our
bank, because due to its experience and our close collaboration, the bank was able to
assist us with many legal issues., The experience with our bank is extraordinary: The
collaboration was excellent, they are very experienced. They have very good procedures
and are very committed to the system as such and our collaboration in general.
One is quick with overlooking benets that cannot be measured in numbers. For instance,
the pure availability of a new source of funding might be more important for some
treasurers of our suppliers than whether they save some money., The SCF solution is
very well integrated in our system and thus offers many benets to us as well as the
suppliers. The payment process got even easier and our suppliers appreciate having more
exibility and information., One of our suppliers told us, that he estimates to save two
man-days, as the reconciliation is much easier for him. He has quite some benets even if
he does not use the credit, because he always knows immediately when his
invoice has been released.
et al. 2009), we nd a strong overlap with existing knowledge

on focal rm adoption decisions. Yet, there is no interaction
with the supply base prior to the implementation stage.
However, there are some unique features inherent to SCF as
an upstream innovation. On the one hand, buying rms as
innovators play a stronger role than sellers of innovative products in identifying SCF as possible solution. Whereas in downstream cases demand for innovation is signalized by customers
or competitors often more explicitly, in the case of SCF the
sample rms reported that few suppliers asked explicitly for a
SCF solution because other rms they supply also offer it to
them. So, the origin of this innovation lies in the buying rm
itself and, hence, SCF could be considered a push rather than a
pull innovation. Moreover, SCF requires rms to consider
working capital efciency gains through structural adaptations.
So, instead of attaining immediate success through innovative
products like in the case of downstream product innovations
which pass through a lifecycle linked to their protability, SCF
is initiated in rms with a long-term focus on recurring efciency improvements.
Implementation of SCF
The effectiveness of innovation adoption depends on the t
between the organization and the innovation itself (Van de Ven
1986). This t can be achieved in three ways: by restructuring
the organization, by redesigning the innovation, or a mixture of
both (Rogers 2003). We will now describe our observations with
respect to redening and restructuring, analyze common patterns
among all cases, and propose three generalizations. For summaries of codes and original quotes, please refer to Table 3.
Redening
Redening SCF is a process during which rms not only adjust
the SCF innovation to their specic context but also initiate a
process in which rms need to reconsider the contextual factors
to which the SCF innovation needs to t (Johns 2006). The valuation of these factors varies over time, as we learn. Epsilons
nancial manager claimed: Although the economic idea is the
same in different SCF solutions we considered, they all differ in
details. [] In the beginning, our priority was to nd a solution
156
that best ts our needs. We learn that the value added for suppliers gains increasing importance during the adoption process.
Epsilons procurement manager argues as follows: If SCF serves
only Epsilons needs, but not the supplier needs, why should any
supplier agree to use SCF? So, Epsilon analyzed how SCF can
be congured to t supplier needs. One aspect of this adjustment
is the particular focus on the provision of visibility into cash
ows and invoice releases such that the suppliers of Epsilon
obtain the maximum degree of exibility, as they can better plan
when they will receive cash ows. Similarly, Delta and Zeta
found solutions to particularly serve supplier needs. Another
aspect of the redesigning of the innovation is revealed by Delta
as it builds its SCF implementation on an already existing automated payment platform within its corporate group. From a technical and information system perspective, Delta thus only needed
to adjust this platform, rather than to integrate an entirely new
one. In this way, Delta redesigned the SCF innovation to its own
needs, rather than having implemented an external standard solution. Thus, rms go through a process of dening criteria to
which the SCF innovation needs to t, before they can actually
redene SCF.
A pattern that emerged among all cases is that there are three
broad categories of redening SCF which rms need to consider
to make context tting decisions: (1) benets allocation mechanisms, (2) degree of automation of transactions, and (3) scope of
suppliers using SCF, summarized in Figure 3.
Restructuring
The SCF innovation requires cross-functional collaboration of
nance and logistics as well as procurement in a way which was
new to all our sample rms. This becomes evident from Epsilons nancial manager who stated: As I never had any operational contact to suppliers I rst had to get to know our internal
managers for suppliers. To not know the own colleagues from
the upstream supply chain functions indicates the absolute
absence of any form of direct communication, making direct collaboration infeasible (Grant 1996; Kahn and McDonough 1997).
But, active collaboration between nance as well as logistics and
procurement managers is required to adopt SCF successfully
because the former are dedicated nancial experts and the latter
often manage the interface with suppliers (Stefansson and Russell
2008). So, the rst step was to bring together responsible
managers of each function in the case of Epsilon. From initial
occasional project meetings, quite formalized patterns of collaboration emerged. At Epsilon, we observed weekly formalized
meetings to discuss recent issues, but also informal meetings
whenever necessary indicating cross-functional collaboration
(Pinto et al. 1993; Kahn and McDonough 1997).
Moreover, adjustments with respect to job design had to be
made. Particularly in rm Zeta, conicts arose due to new tasks
inherent to SCF, as its nance manager explained: Procurement
managers initially said, it is not our task to use SCF, it is not in
our working contracts and job description. We do not want to
implement SCF. In contrast to traditional tasks of upstream
logistics and procurement managers (Chopra and Meindl 2012),
the adoption of SCF requires further tasks as it becomes necessary to market the SCF innovation upstream. These marketing
skills, however, are quite distinct from traditional skills present
in these functions (Ellinger et al. 2000). Typically, in the case of
D. A. Wuttke et al.
downstream innovations, marketing and sales people are much

more experienced and procient in promoting innovations to
their customers than logistics and procurement managers having
to market upstream innovations to their suppliers. This adds further complexity to their job which has to be accepted and learned
by procurement and logistics managers rst. Therefore, this
demand for capability building during the adoption process contributes further to the widely adopted quest for a more strategic
mind-set and strategic skill-sets in upstream supply chain functions (Das and Narasimhan 2000).
Furthermore, restructuring includes alignment of performance
measurement systems and incentives of individual managers, as
we observe at Epsilon whose nancial manager explained:
In our experience, SCF is likely to fail without changes of incentive structures. In line with previous research this can likely be
generalized (Eisenhardt 1989a; Prendergast 1999). Interestingly,
our observations show the particular need of aligning logistics
and nance incentives with respect to working capital.1
Our analysis shows further how restructuring and redening
are interrelated. On the one hand, decisions on the three categories of redening, which we identied above, can only effectively be made as the buying rm succeeds in restructuring. On
the other hand, the organization needs specications derived
from the redenition process to effectively restructure any of
these categories. Therefore, both processes are truly intertwined
and involve each other. More formally,
Proposition 1
Restructuring of organizations internally and redening
the SCF innovation according to the supply base needs
are interrelated and mutually enforcing processes in the
sense that neither alone can be successful without the
other process advancing.
Effectiveness of restructuring and redening
The progression of the mutually enforcing processes of restructuring and redening may assume different levels of effectiveness, as we observed at Gamma, Delta, Epsilon, and Zeta. This
suggests that the relationship above might be moderated by
another factor. In particular, our analysis reveals two factors.
First, the adjustment of performance measurement and the
increased use of cross-functional teams bring redening and
restructuring processes together. Epsilon, for instance, was only
able to combine both processes when logistics and nancial managers started to work in teams. Likewise, for Zeta the alignment
of its nance and strategic procurement function, which was
responsible for the SCF implementation, was required. We will
refer to both, adjustment of performance measurement and crossfunctional collaboration, as logistics/procurement-nance align1
Working capital equals inventory and cash plus accounts

receivables minus accounts payables (Brealey et al. 2007). Previously, the logistics objective was to focus only on inventory
while SCF also requires focusing on accounts payables, if the
buying rm decides to use payment term extension as a means
of benet allocation.
157
Figure 3: Categories of redening the supply chain nance (SCF) innovation.
ment. With this term, we indicate that up-to all three functions
need to be aligned toward common goals of SCF while we
acknowledge that whether or not logistics and/or procurement
needs to be aligned with the nance function depends on the
organizational structure, as Epsilon and Zeta show. Such an
alignment differs from the prior working relationship between
the three functions in all analyzed rms. Whereas before adopting SCF members of these three functions essentially only agreed
that costs have to be reduced (only procurement and logistics
have certainly more congruence), logistics/procurement-nance
alignment implies that all of these functions share the same
objectives and think in the same direction toward SCF aims
based on a broader mindset. The involved functions need to
agree that a practice such as SCF can actually improve corporate
performance, although it is distinct from the traditional tasks of
logistics and procurement. On the other hand, nancial managers
involved in the SCF project need to understand challenges in the
current supply chain setting, before deciding on how to use SCF.
Yet, logistics/procurement-nance alignment does not per se lead
to SCF adoption. Consider for example Delta, which recently
gained quite high-internal alignment regarding SCF, but is still in
early stages of the implementation process. Nevertheless, logistics/procurement-nance alignment strengthens the link between
redening and restructuring, and thus indirectly has a positive
impact on the effectiveness of SCF implementation.
Second, a similar pattern emerged with respect to early
involvement of suppliers. Delta, Epsilon, and Zeta have only
concentrated on the internal perspective in the very beginning,
but soon recognized the need to include the interest of suppliers
as well. Therefore, they selected suppliers for pilot projects, conducted intensive workshops, and remained open for serious feedback of suppliers. The objective of such an involvement is to get
meaningful feedback on SCF for a dened time during the adoption project to redene SCF according to the suppliers needs.
This is opposed to the previously studied supplier integration for
recurring interaction focusing on the joint set-up of infrastructure
for efciency in recurring NPD projects with preferred suppliers
(Monczka and Morgan 1996; Das et al. 2006). A consequence
resulting from this difference is manifested in the selection of
suppliers for early involvement in the restructuring and redening stages. In the case of Delta, we learned that important, but
not crucial suppliers were selected for these studies, as Delta was
afraid of unpleasant side-effects such as endless workshops
distracting a suppliers valuable resources from required business. Furthermore, these suppliers were purposefully selected:
Particularly large suppliers with credit ratings lower than the

buying rm were preferred, as these have higher potential benets.
This involvement of suppliers had two major outcomes: rst,
redesigning SCF to match the needs of the supply base became
signicantly easier. And second, the organizational restructuring
got more sophisticated as the discussions with suppliers led also
to a closer collaboration and information exchange of nance,
logistics, and procurement managers. So just like logistics/procurement-nance alignment, the involvement of suppliers per se
does not increase the effectiveness of the SCF implementation
directly, but it strengthens the link between restructuring and
redening indirectly. More formally,
Proposition 2
The interrelated progress of restructuring and redening
is moderated (a) by logistics/procurement-nance alignment and (b) by supplier involvement with the progress
being more effective with higher levels of logistics/procurement-nance alignment and supplier involvement.
Clarifying and disseminating
We now turn our attention to the time period after rms have
successfully accomplished redesigning and restructuring. In particular, we focus on Epsilon and Zeta as they reveal mechanisms
that may be generalized to predict which rms are more effective
in the adoption process toward reaching the routinizing stage.
During this period, rms have two main objectives.
First, rms need to persuade all inbound logistics and procurement managers related to the operational use of SCF. Zetas
nancial manager described: We conducted several workshops
with upstream supply chain managers [], but yet there was
much resistance. They needed to see some good examples of
their colleagues. Once these colleagues were formally appraised
in meetings, everyone began to understand that SCF is important
and the acceptance grew. Similarly, his colleagues from
upstream supply chain functions shared the opinion that one of
the most important aspects was to persuade managers to use
SCF. Although in the case of Epsilon resistance was lower, Epsilons managers still reported to have many meetings to get
everyone on board (logistics manager). As this process is very
similar to what Rogers (2003) calls clarifying, we will use the
same term.
158
Second, in contrast to existing literature on organizational

innovation adoption stating that clarifying is among the most
crucial aspects of innovation adoption (Van de Ven 1986), we
identify another process of equal importance: upstream dissemination. It refers to the concept of accelerating the innovation diffusion among suppliers and ultimately to make them use SCF.
While the rm Delta is not yet in this stage and rather plans how
to disseminate the innovation among its suppliers, Epsilon and
Zeta provide detailed insights on this process step. Both reveal
that dissemination would be straight forward, if upstream supply
chain managers of the focal rm could directly talk to the people
in the selling rm responsible for SCF (often the CFO). But,
instead of talking to CFOs, they rather communicate with sales
managers who are often either not competent with respect to
nancial decisions or simply not interested in it (procurement
manager, Zeta). So, the rst task is to create awareness among
the suppliers decision makers, usually involving nancial managers and less frequently sales managers. Once they are aware,
they need to be persuaded of the benets and eventually it has to
be ensured that these suppliers actually use SCF. Accomplishing
these three steps is considered a success by Epsilon. During this
stage, it is essential to have support from nance (Epsilon, procurement manager), but also to achieve clarication (i.e., a sufciently large number of upstream supply chain managers of the
buying rm believing that SCF works and wanting to use it). In
particular, the latter is important as these managers usually have
the direct contact to suppliers.
Thus, a tight relation between clarifying and disseminating
seems to exist as both are connected: Without clarication, few
upstream supply chain managers will put effort into disseminating the SCF innovation. The dissemination itself and successful
on-boarding of suppliers in turn has a positive impact on the
clarication as it proves the feasibility and value of SCF. Thus
we posit,
Proposition 3
Clarifying and disseminating are interrelated and mutually
enforcing processes in the sense that neither alone can be
successful without the other process advancing.
This stage of dissemination is distinct from previous research as
the role of external members in the innovation process is much
smaller in common organizational innovations (Van de Ven 1986;
Rogers 2003). Therefore, our analysis required us to go beyond
our knowledge about previous innovations and to explore attributes increasing the effectiveness of rms during the dissemination
stage. In contrast to previous downstream innovation dissemination, the focus of SCF is more on persuading the right people than
on maintaining and improving interorganizational relationships by
specic long-term investments to develop new products (Kim
2000). Note, that both tasks are quite distinct.
Effectiveness of the upstream dissemination process
Suppliers are willing to adopt SCF, if they expect high returns,
which is central for the assessment of a buying rms dissemination effectiveness. Although a buying rms credit rating determines in principle the interest rate a supplier would face using
D. A. Wuttke et al.
SCF and, thus, ultimately the suppliers potential savings, we

observe that concurrent qualitative benets might even be more
important for suppliers. From Zeta, for instance, we learn that
suppliers gained exibility through online visibility into the payment process and the automatization provided by the SCF solution. Delta also witnessed during its pilot studies that having
another source of nance might be more valuable to some suppliers than the mere nancing cost difference. All such benets
a buying rm can provide to its suppliers were categorized as
SCF leverage. These benets result from the buyers credit
rating and the conguration of SCF, particularly the allocation
of benets. Therefore, SCF leverage is rather specic to the
organization than to the relationships with suppliers. It is important to understand a buying rms SCF leverage to predict
whether or not it will be able to effectively disseminate the SCF
innovation: Thus,
Proposition 4a
SCF leverage has a positive impact on the dissemination
of SCF in the sense that it increases the effectiveness of
the dissemination process in the supply base.
Furthermore, the individual buyersupplier relationships as
well as the communication channels used play a pivotal role.
Particularly important are the two well-known constructs trust
and power (Emerson 1962; Casciaro and Piskorski 2005;
Thomas and Skinner 2010). The absence of trust reduces the
suppliers willingness to adopt SCF, as we learn from Epsilon
that made several attempts, where its bank tried to directly
contact suppliers. However, these suppliers expected that there is
a catch to SCF, as they did not trust an external bank they are
not currently doing business with. But, when Epsilon started to
expound the benets with almost the same explanation, these
suppliers became interested. The positive effect of trust can be
observed in further cases, thus it is plausible that for all rms
trust is an important attribute for innovation dissemination.
Furthermore, the cases Epsilon and Zeta reveal that buyer
power is also used for disseminating the innovation upstream.
For instance, if Epsilon is in a very powerful position with a certain group of suppliers, it dictates them to use SCF, as Epsilons
nancial manager explained: We would say to our supplier,
We will extend payment terms anyway. It is up to youtake
our SCF offer or leave it. And none of these suppliers refused
to use SCF, because this kind of coercive power does not leave
the supplier any real choice (Bacharach and Lawler 1981; Lawler
1992; Benton and Maloni 2005). Similar to trust, power is a relational strength that has emerged from previous interaction
between the buying rm and suppliers (Emerson 1962; Pfeffer
and Salancik 1978; Casciaro and Piskorski 2005). An interesting
aspect of our observations is, however, that even coercive power
is used intentionally to bolster suppliers, whereas previous studies showed that coercive power is rather used as a means of supplier exploitation (Benton and Maloni 2005).
Furthermore, Epsilon and Zeta have different tools of persuading suppliers of the SCF innovation, ranging from simple communication, such as standard e-mails and phone calls to more
sophisticated communication including meetings and workshops
where nancial experts from both parties are involved. In particular, we see the use of the latter rather with suppliers of high
importance.
These three attributestrust, buyer-power, and communication
obtrusivenessreect categories of relationship strength, as each
of them is relationship specic opposed to SCF leverage. The
more buyersupplier relationships are characterized by such
strengths, the more effectively a buying rm can disseminate
SCF in the supply base. More formally,
Proposition 4b
Relational strength has a positive impact on the dissemination of SCF in the sense that it increases the effectiveness
of the dissemination process in the supply base.
Propositions 4a and 4b state that buying rms have particularly four concepts for persuading suppliers, namely SCF leverage, trust, power, and communication obtrusiveness. These
concepts determine the enforceability of dissemination (i.e., the
persuasiveness of the buying rm). But they differ clearly in
their results: although a concept such as buyer power virtually
forces weaker suppliers to adopt SCF, the other extreme of
purely offering benets might be less effective as discussed
above. Another important dimension is the long-term buyersupplier relationship quality. In contrast to the enforceability of dissemination, offering true benets to the supplier has a positive
impact on the buyersupplier relationship quality (Ganesan
1994), while the use of coercive power might deteriorate supplier
satisfaction (Benton and Maloni 2005). Between both extreme
poles are trust and communication obtrusiveness. Although both
are slightly more enforcing than purely suggesting benets, their
overuse may deteriorate the relationship quality as well. As communication becomes too penetrative, suppliers may generate a
feeling of resentment.
This trade-off between enforceability of dissemination and the
quality of buyersupplier relationships uncovers a specic
dilemma of upstream innovation dissemination. Although SCF
usually benets the supplier, there might be resistance or inertia in
the supplier base, which might induce buying rms to employ
more effective concepts of persuasion deliberately risking a
decrease in buyersupplier relationship quality. This is different in
downstream dissemination where often customers actively demand
innovations (Neale and Corkindale 1998; Gruner and Homburg
2000). Therefore, in the downstream dissemination achieving high
enforceability and a positive impact on relationships is often not a
contradiction opposed to upstream dissemination. The effect of
concepts used for accelerating the upstream dissemination process
on the enforceability of dissemination and the buyersupplier relationship quality are characterized by Figure 4.
159
(2003) framework, it is possible to combine these propositions

into a framework of SCF adoption. Opposed to organizational
innovations, redening SCF requires taking needs of the
upstream supply chain partners into account. This process is closely interrelated with restructuring organizations (Proposition 1).
This interrelation increases the complexity of adopting SCF as
opposed to general innovations, in which redening and restructuring can be decoupled and managed sequentially.
Furthermore, we nd that rms will be more effective during
this stage, if they achieve logistics/procurement-nance alignment (Proposition 2a), which is an entirely new phenomenon in
many organizations. Whereas collaboration between both functions can be witnessed in operational cost reducing projects, the
strategic alignment targeting toward a shared objective is new in
many rms, as this often requires enhanced mutual understanding
and a broadened skill-set of logistics, procurement, and nance
managers. This logistics/procurement-nance alignment is also
typical for SCF, whereas previous processes may have required
internal alignment, the alignment was usually between two operations functions such as manufacturing and procurement (e.g.,
Narasimhan and Das 2001) or logistics and marketing (e.g.,
OLeary-Kelly and Flores 2002) other than an alignment between
corporate nance and operational upstream logistics or procurement. The early involvement of selected suppliers in innovation
projects is neither entirely new to the buyer nor to these suppliers (Proposition 2b). It is rather the SCF innovation in itself that
is a complete novelty to the personnel of the buyer and the
seller. This creates management challenges for the buying rm
internally and thus also externally when involving selected suppliers at an early stage when the own organization has not yet
fully claried and absorbed SCF.
Next, rms need to clarify internally and disseminate the congured SCF innovation upstream. Both processes are closely intertwined and presuppose each other (Proposition 3). Moreover, the
ability of the upstream supply chain functions to compensate for
their lack of experience in marketing chances and benets of the
SCF innovation to an outside entity differentiates effective SCF
adopters from less effective rms. In design chain management
with suppliers for effective NPD, the benets are explicit and obvious to the suppliers given the relational history of collaboration in
this domain. Again, this intertwinement increases the complexity
of the adoption process. Although particularly nance managers
often lack the focus on suppliers needs, it is the responsibility of
the logistics and/or procurement function to ensure that enough
suppliers are on-boarded.
Moreover, the dissemination of SCF can only be accomplished
if the redesign was successful and if rms have SCF leverage
(Proposition 4a) and relational strength (Proposition 4b).
Opposed to downstream dissemination, rms have to consider
the trade-off between dissemination enforcement and long-term
relationships. Figure 5 illustrates the extension of the Rogers
(2003) framework and shows how our propositions add to the
understanding of the SCF adoption process.
DISCUSSION OF SPECIFIC FINDINGS ON INNOVATION

ADOPTION OF SCF
CONTRIBUTION, INSIGHTS, AND LIMITATIONS
In the previous analysis we have developed four sets of
propositions that characterize the SCF adoption process from a
buying rms perspective. Based on an extension of Rogers
The theoretical contributions of our research to innovations in

logistics are manifold. First, we add to the emerging research
160
D. A. Wuttke et al.
Figure 4: Enforceability and relationship impact of dissemination concepts of supply chain nance (SCF).
on the logistics and nance interface (e.g., Buzacott and Zhang

2004; Berling and Rosling 2005; Caldentey and Chen 2009;
Hofmann and Kotzab 2010) by taking an organizational perspective. Whereas previous research in this new domain
focused mainly on the outcomes of managing the nancial and
physical ows jointly, we explore the process of getting there.
We contribute by positing testable propositions relating detected
internal and external management practices and buying rm
characteristics to the progress of the SCF adoption process.
Moreover, we add to previous conceptual insights on SCF.
Opposed to previous research in this domain being rather conceptual, we provide positivistic, empirical results which offer
actual real and in-depth insights on what is practiced. While
Pfohl and Gomm (2009) show how optimizing nancial ows
Figure 5: Extension of Rogers (2003) framework.
in supply chains can lead to working capital improvements in

general, we analyze a specic approach. By taking this specic
approach, we are able to identify several variables that inform
the adoption of SCF as depicted in Figure 5, as well as specic
means that buying rms may use to disseminate the innovation
upstream as shown in Figure 4. Although our research departed
from the specic SCF practice, we believe that certain results
on the upstream diffusion are transferable to other mechanisms
of improving nancial ows along supply chains; for instance,
those involving logistics service providers as studied by Hofmann (2009) and suggested by Gomm (2010). In the same
manner, we also add to the work by Hofmann and Kotzab
(2010), who show how rms should collaborate along supply
chains to improve working capital. Specically, this contribu-
tion of ours is obtained by studying SCF as a practice which

involves a bank to optimize working capital and reduce costs
of capital along the supply chain.
Second, we analyze the construct of upstream dissemination.
This construct takes a central role in the adoption process of
upstream supply chain innovations. Similar to the ve stages that
Rogers (2003) discusses with respect to organizational innovations, upstream dissemination appears to be a further stage, for
the adoption and successful routinizing of SCF processes. Without sufciently many suppliers also adopting SCF, there will
never be a state of routinizing. Moreover, this construct is specic as other types of innovations are usually marketed downstream the chain to be adopted by customers and to differentiate
the focal rm offerings from competitive product-service bundles
(e.g., Cooper and Kleinschmidt 1995). Nevertheless, we believe
that this construct can be further generalized to other types of
upstream supply chain innovations. It may also provide an explanation why certain rms are more innovative in logistical processes.
Third, although we study the particular process of SCF, we
believe that many insights gained here are generalizable to further adoptions of innovative processes focusing upstream the
supply chain. In particular, the role of early supplier involvement, internal alignment of previously less integrated functions
(e.g., logistics and nance), and relational strengths, as these are
not SCF-inherent. Therefore, this study is not only a howto-adopt-SCF-study, but rather a study that provides a broader
perspective on upstream supply chain innovations. Against the
rising importance of logistics and its impact on organizational
performance it is plausible that buying rms will invent further
processes which revolutionize aspects of their upstream supply
chain not limited to the nancial ows investigated in this
research. During these processes, we believe, structural insights
from our study may serve as a rst starting point to systematically analyze the implications when seeking to implement innovations to improve logistical ows between upstream supply
chain partners.
Moreover, our research has several implications for logistics
managers. We departed from the problem that rms require
means to extend payment terms and to provide liquidity for their
suppliers at the same time. SCF is an innovative practice which
could solve this dilemma. Our ndings suggest that (1) Opposed
to previous supply chain innovations where nancial managers
play a subordinate role, SCF requires logistics managers to work
closely with their nancial counterparts and to understand
the mechanism of SCF to persuade suppliers, rather than merely
to apply SCF. (2) Opposed to traditional innovations designed to
serve customers, SCF requires buying rms to redesign SCF to
capture and address supplier demands as if they were customer
demands in NPD projects. Therefore, logistics managers need to
acquire certain marketing skills and involve suppliers early on to
foster later upstream dissemination among a wider base. (3)
Managers should bear in mind that SCF will not work for each
buying rm. Firms need SCF leverage and relational strength to
become effective adopters. Otherwise buying rms can adopt
SCF, but will face only a little proportion of suppliers using it.
(4) If a buying rm eventually decides to adopt SCF, it has
different concepts at its disposal for the upstream dissemination.
When choosing the approach, managers need to take the trade-
161
off between enforceability and impact on buyersupplier relationship into account.

However, as with all empirical research our study also has
several limitations. As we limited our study to the specic
implementation of SCF, it would be interesting to see if the
propositions also hold in different settings. For instance, as
besides nancial institutions such as banks also logistics service
providers may engage in cash ow optimization (e.g., Hofmann
2009), it would be interesting to hypothesize that the same
attributes of buying rms are required for upstream dissemination as in the case of SCF and to test whether this holds. Since
our primary objective was to understand the SCF adoption
itself, we explored this process in six rms. Although we
selected cases deliberately, it is not possible to conclude that
the ndings are transferable to all rms without adjustments.
However, having derived testable propositions, future research
might test them in large-scale studies in related domains. A further limitation is the restriction to European rms. It is plausible to assume that distinct banking and industrial contexts
would signicantly alter the adoption process (e.g., limited use
of electronic banking and strong use of checks in India). But,
particularly in regions where suppliers access to nancial markets is more restricted, they might be demanding innovations
such as SCF even stronger than European suppliers do. Finally,
our study captures a snap-shot of the adoption process in each
rm. It would be interesting to study rms longitudinally as
this would show if each rm follows the innovation adoption
process detected in this research.
Our study also reveals further adjacent research topics which
might guide researchers interested in the domain of SCF. First, it
would be interesting to broaden the research on upstream innovations to more than one type of innovation. This would foster the
understanding of the particularities of upstream innovations and
help to differentiate between internally and externally oriented
rm practices and characteristics that are specic for the success
of the SCF adoption and those generalizable to other types of
upstream innovations. Second, it will be interesting to analyze
the SCF innovation from the viewpoint of the supplier to further
complement our understanding of upstream innovations. This
approach might also reveal further success factors for the implementation of SCF.
Even though our study is not without limitations, we believe
that our study marks a rst cornerstone in the exploration of this
important and fast evolving eld of the coordination of interrelated nance and logistics decisions.
ACKNOWLEDGMENTS
An earlier version of this article was presented at the CSCMP
European Research Seminar (ERS) in Frankfurt in May 2012.
We wish to thank the attendees for sharing insights that helped
improve the quality of the article. We also want to thank the participants of a research colloquium held at EBS University for
their comments and thoughts which helped to strengthen our
manuscript. Moreover, we are thankful to the three anonymous
reviewers for their insightful and constructive feedback. Finally,
our thanks go to the Studienstiftung des deutschen Volkes, which
supported David Wuttke with a scholarship during this research.
162
APPENDIX CASE DESCRIPTION
COMPANY ALPHA
Alpha is a multinational coating and chemical company.
Although it supplies both, industry and consumers, we focus on
its industrial coatings sector. Alpha has a very strong reputation
for sustainable business practices requiring innovation. The
nancial crisis heavily affected the specialty chemical as well as
the coatings industry. Supplier defaults as a consequence of
liquidity shortages were, however, rather the exception.
Despite being innovative in products, Alpha is still in a very
early stage of the SCF adoption. Alphas managers were only
becoming aware of SCF and its benet. Alpha still hesitates to
implement SCF as many suppliers are from Northern Europe,
particularly the United Kingdom where payment terms are relatively short. Therefore, these managers believe that potential benets of SCF might be rather small. On the other hand, Alphas
managers are concerned about bringing the innovation through
the supply chain, as other matters are of higher importance for
its suppliers than nancing like sustainability projects. Therefore,
Alphas managers are afraid that enforcing SCF too heavily in
the supply base might have negative consequences.
Thus, Alpha can be considered being in the matching stage as
it tries to identify how SCF could help to meet its logistics goals
of further inventory optimization along its supply chain.
COMPANY BETA
Beta is a globally leading aircraft manufacturer. The aviation
industry is characterized by high levels of safety standards making
it almost impossible to exchange strategic suppliers. A further
characteristic of this industry is that many products are prenanced
by the buyer including advance payments. Thus demanding payment terms extensions for strategic suppliers is rather unusual for
Beta. At the moment, Beta is trying to improve its working capital
through consignment stock and vendor managed inventory (VMI),
as, during the nancial crisis working capital gained increasing
importance. Therefore, the reduction of working capital, also with
a strong cash focus, is on the top of Betas corporate agenda.
Betas managers, at the time of data collection, have been
gathering information from diverse banks to understand how
SCF could t to its particular supply chain and industry setting.
However, against the background of high safety standards, Betas
managers appear also quite riskaverse when it comes to implementing process innovations such as SCF. Therefore, Beta managers believed that it was better to wait for other rms adopting
SCF to avoid early adopter risks. Moreover, Beta believes that it
will depend more and more on nancially healthy suppliers in
the future. Thus, its suppliers should rather be able to nance
themselves than relying on solutions like SCF. Finally, there is a
lack of top-management commitment regarding SCF, as other
working-capital related projects such as VMI have been recently
launched.
Hence, Beta can be considered in the matching phase, but is
potentially rejecting SCF.
D. A. Wuttke et al.
COMPANY GAMMA
Gamma is in the chemical industry supplying mainly industrial
rms. During the nancial crisis it suffered heavily from industry
downturn. Although supplier defaults were exceptions, Gammas
managers perceive that many of its suppliers have nancial constraints and might be negatively affected by extended payment
terms of Gamma.
Gamma has recently launched several initiatives targeting the
improvement of working capital. Thereby, it approaches the cash
conversion cycle holistically: After signicant reduction of inventories, it strived for the systematic extension of payment terms
with its suppliers, and reduction of payment terms with its customers. Whereas these measures allowed substantial working
capital improvement, management is now concerned that further
improvements are difcult. Therefore, top managers of Gamma
are continuously urged to identify new means of improving net
working capital.
In 2009, Gamma rst got exposed to SCF, as it learned from
successful business cases in other industries, mainly the automotive industry. Due to its centralized cash management team, SCF
obtained quite fast top management commitment. Within the corporate team, Gamma identied soon how SCF could potentially
be matched with its own needs and how it could be employed.
However, the team also faced immense challenges implementing
it. For instance, nancial auditors mentioned that SCF might
result in classication conicts in auditing, as under certain circumstances amounts handled through SCF could no longer be
classied as accounts payables, thus destroying the working capital effects of SCF. Furthermore, Gamma has a relatively weak
credit rating in comparison to other rms in our sample, which
might be still better than some of its suppliers, but managers perceive a lower benet due to the credit rating.
As Gamma found no satisfying solution it still tries to restructure SCF according to its own needs.
COMPANY DELTA
Delta is an innovative company in the pharmaceutical industry.
In this industry, margins for patented products are quite high
even during the nancial crisis. Particularities of the industry are
the extremely high requirements on product availability because
production stops might threaten lives. Therefore, Deltas highest
supply chain objective is a stable supply of raw materials. Working capital optimization and payment terms are rather secondary
targets. However, during the nancial crisis certain suppliers
faced immense nancial shortages. As one manager of Delta
states, the question was no longer whether suppliers were able
to deliver the right quality at the right time, but rather whether
they would be nancially able to deliver at all. Therefore,
increasing attention was placed on working capital management,
particularly with respect to suppliers.
Independent from its supply chain, Delta started a payment centralization project in close collaboration with its corporate bank in
2009. The aim of this project was to increase transparency of its
payment processes and to pool cash resources on a company-wide
scale. This project required substantial changes in its internal platforms, as Delta is a huge, global rm with dispersed subsidiaries.
So, two important developments came together, when Delta

rst learned about SCF: On the one hand, the need to increase
liquidity in its upstream supply chain and on the other hand, the
availability of an integrated payment platform was desired. While
arguably Delta would have the nancial resources to always pay
immediately, it is still reluctant to do so, as this would cause
Deltas working capital to deteriorate signicantly. But, SCF was
recognized as promising solution, because it improves the liquidity situation of Deltas supply chain without deteriorating its
own. Moreover, the expenses appear to be small, as the new payment system is so exible, that it can easily be adjusted to SCF.
During the most recent interviews we learnt that Delta is currently engaged in conducting two pilot SCF-studies with two
important, but not overly strategic suppliers to better learn under
which circumstances SCF ts best and how it should be congured in Deltas particular case. Although Deltas industry situation is quite distinct from other rms we studied, the challenges
it faces are similar to others. Delta needs to convince its suppliers as these are not per se interested in SCF and in bringing in a
new bank corporate bank to do business with.
Therefore, Delta could be considered to be in the implementation stage. Particularly, its most recent objective during the time
of data collection was to redesign SCF according to its supply
chain needs through the involvement of selected suppliers.
COMPANY EPSILON
Epsilon is a global leader in the raw materials and chemical
industry. Innovations in general and continuous introduction of
innovative products are key cornerstones of its business strategy.
As such, Epsilon is among the innovation leaders in its industry.
While Epsilon witnesses the increasing need for sustainability
along the supply chain, it tries strongly to incorporate nancial
sustainability. Moreover, Epsilon has many suppliers in Central
and Southern Europe, where payment terms are typically longer
than in Western Europe. Therefore, Epsilon perceives a comparatively higher need to manage nancial ows along its supply
chain. Overall, Epsilon faced very high levels of working capital,
which Epsilon wanted to decrease as quickly and sustainable as
possible.
When it rst got exposed to the idea of SCF in 2008, Epsilons managers quickly sensed the great potential of this solution.
Epsilon set up a task force team composed of procurement and
nance managers to identify potential SCF solutions offered by
diverse international banks. But, Epsilon also encountered difculties from its nancial auditors, as these demanded to classify
amounts covered by SCF as liabilities against nancial institutions. However, Epsilon was able to identify certain rules
together with its nancial auditors, under which these amounts
remained classied as trade credits.
During interviews conducted with managers from Epsilon, we
learned that suppliers are still actively on-boarded onto the SCF
platform. To achieve this, Epsilon uses different means. For
high-procurement volume suppliers, workshops with the suppliers sales and nancial managers are carried out. In case of
small, less important suppliers Epsilons procurement managers
inform them during negotiations about the SCF solution. Typically they would approach their suppliers by simply demanding
163
extended payment terms, but offering SCF as a means of reducing the resulting burden to the supplier.
Epsilon is content with the already achieved results of the
SCF solution. Therefore, the plan of Epsilon is to bring SCF into
a routinizing state now, to use it in its daily processes, where
on-boarding new suppliers will rather be an occasional
exception.
COMPANY ZETA
Zeta is a German manufacturing company in the automotive
industry facing a highly competitive environment with enormous
pressure on costs and working capital. The pressure on costs
even increased during the nancial crisis, when customer demand
was signicantly smaller and capacities could not be fully utilized. Zeta is known for innovative and high quality products.
Zeta, although it produces in Europe where it faces rather
short payment terms with its suppliers, delivers to Asian rms
which usually have long payment terms. Therefore, on average it
pays its suppliers 20 days earlier than it is paid by its customers.
However, Zeta achieved a level of payment term extensions with
its suppliers where it would be difcult to further extent the
terms without facing serious liquidity problems of suppliers. So
even before the nancial crisis, already in 2006, working capital
management received increasing attention. At that time, Zeta
identied the practice called SCF to be successful outside of Europe, but yet did not nd any solution provider in Germany.
Therefore, it started collaborating with its corporate bank, which
so far had no experience with SCF in Germany, to set up a new
SCF platform. This project was initiated in early 2007 and
shaped by mutual learning between Zeta and its bank.
Early implementation stages were characterized by numerous
internal discussions and several struggles caused by a low willingness to adopt a new process. However, when top management
commitment raised, communication improved and rst positive
cases highlighted the acceptance grew. Since the two-rst pilots
in the end of 2007, an increasing number of suppliers switched
to SCF. After a successful adoption of SCF in Germany, further
European countries were targeted and suppliers on-boarded. By
the end of 2011 almost all important suppliers, which were
intended to be switched, have been addressed and invited to use
SCF. Many of them agreed.
So, eventually SCF is becoming a routine for the procurement
managers. When asked about SCF in 2011, one procurement
manager answered us: SCF is a standard tool, which we use to
avoid negative consequences of extended payment terms for our
suppliers. This clearly highlights that after Zetas long way of
redesigning its processes and redening the characteristics of the
SCF platform, today SCF is a routine process.
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D. A. Wuttke et al.
has taught strategic sourcing and procurement at several international universities (e.g., IAE Aix-en-Provence, Lomonossov University Moscow, St. Petersburg State University, Technical
University Berlin) and in numerous Executive Education programs (e.g., BASF, Siemens, DHL, Nestl!e, Deutsche Bank). At
IIM Bangalore he helped to build up the rst chair for strategic
sourcing and procurement and hosted the rst India Sourcing
Summit with international exposure. In addition, Dr. Blome is
actively involved in the international research scene as a frequent
presenter at Academy of Management, POMS, EUROMA, Decision Sciences and IPSERA conferences. His research interests
are all related to the strategic sourcing and procurement domain
where he tries to always explore the most recent phenomena to
provide future guidance to the discipline. Up to now, his
research has been published in international journals like Journal
of Supply Chain Management, International Journal of Production Economics, International Journal of Production Research,
Journal of Business Logistics, Journal of Business Ethics, and
Journal of Purchasing & Supply Management. Currently, Dr.
Blome supervises around 10 PhD students.
David A. Wuttke (Dipl.-Wirt.-Ing. University of Paderborn)

is a doctoral candidate at EBS University of Business and Law,
Wiesbaden, Germany. He also serves as research assistant at the
Institute for Supply Chain ManagementProcurement and Logistics (ISCM), with primary research interests in supply chain
innovation and nancial supply chain management. During his
doctorate he has afliated with the Carlson School of Management at the University of Minnesota as a research scholar. His
research is supported by the German National Academic Foundation and has been presented at POMS and INFORMS Conferences.
Kai Foerstl (Dr. rer. Pol. EBS University of Business and

Law) is an Assistant Professor for Global Sourcing at EBS University of Business and Law in Wiesbaden, Germany. Over the
last years he has been involved in industrial research projects in
the pharmaceutical, automotive, and logistics services industries.
His primary areas of research include global sourcing decision
making, upstream supply chain innovation adoption, and sustainable supply chain management. He has published his research in
various outlets such as the Journal of Supply Chain Management, Journal of Purchasing and Supply Management, International Journal of Production Research, International Journal of
Operations and Production Management, Supply Chain Management Review, and other managerial outlets. He received the Harold E. Fearon Best Paper Award 2010 of the Journal of Supply
Chain Management.
Constantin Blome (Dr. rer. Oec. Technical University of Berlin) was appointed as the GSK Vaccines Chair Professor in Strategic Sourcing and Procurement at Universit!e catholique de
Louvain (UCL) in September 2011. Dr. Blome has gained substantial experience in sourcing and procurement in various ways.
To name a few: He was senior consultant in the procurement
domain for a Swiss consulting rm. Following his doctoral
degree in 2006, was hired as an Assistant Professor in Sourcing
in Emerging Markets at the EBS Business School, Wiesbaden,
Germany where he contributed in growing the Supply Chain
Management Institute to one of the largest and most successful
European research groups in this eld. Furthermore, Dr. Blome
Michael Henke (PhD Technical University in Munich/Germany) nished his habilitation in 2007. Prior to joining EBS as a
Senior Professor, he worked as Senior Consultant with the Supply Management Group in St. Gallen, Switzerland. In his current
role Michael Henke is responsible for teaching and research in
the areas of nancial and management accounting, supply management, supply risk management, supply performance management, supply controlling, and others. Additionally, he is leading
and developing various research projects in the eld of nancial
supply chain management in cooperation with well-known international enterprises. His research ndings can be found in
numerous journal articles, book sections as well as books.
SHORT BIOGRAPHIES

Where Do We Go From Here? Progressing Sustainability

Implementation Efforts Across Supply Chains
Sebastian Brockhaus1, Wolfgang Kersten1, and A. Michael Knemeyer2
1
2
Hamburg University of Technology

The Ohio State University
he ndings from an inductive study conducted in the United States and Europe focused on sustainability implementation efforts across
supply chains are reported. In particular, the study focuses on developing a better understanding of: how do companies involve other
members of their supply chain into their sustainability efforts? Building upon themes that emerged from the data, a typology for the supply
chain implementation of sustainability initiatives is proposed. A lack of supply chain integration was identied and companies reported a tendency toward a mandated implementation when extending efforts across companies. These efforts are generally initiated by the dominant
companies and then forced onto the weaker upstream members. The data suggests that the merits of these initiatives are viewed as being disproportionately awarded to the dominant rm and thus did not receive full buy-in from the other party. A common vision by both sides of this
relationship is to develop a more collaborative implementation that can be supported by all the involved parties. In theoretical implications,
empirical ndings are viewed through the lens of several prominent management theories in order to augment and elaborate current theory.
Managerial implications, limitations, and opportunities for further research are detailed.
Keywords: sustainability; supply chain integration; collaboration
We were in a meeting with a retailer 2 years ago. They

said: You WILL [emphasis added] provide us with a sustainable product. We wont forget. It wasnt a question; it
wasnt a request; it was a statement. (Interview # 17,
Home Appliances, U.S.)
INTRODUCTION
Todays consumers pay attention to the environmental impacts of
the products they use. Although this awareness might not translate
directly into buying behavior83% of consumers in a recent poll
expected companies to become more environmentally friendly,
whereas only 22% were going to pay more for environmentally
sustainable products (The Nielsen Company 2011)as such, sustainability claims surely impact the perception consumers have of
products, for the better or worse (Luchs et al. 2010). Consequently, an increase in interest in the topic from an industry perspective has been observed (Markley and Davis 2007) and the
topic is considered a megatrend in todays global economy worthy
of additional academic focus (Lubin and Esty 2010; Carter and
Easton 2011; Fawcett et al. 2011). Despite this rising level of
attention, sustainability is often treated as an abstract, relative concept (Faber et al. 2005)the diversity of business strategies, marketing campaigns, product introductions, and whole corporations
labeled sustainable adds to the fuzziness around the concept.
There has been only a limited amount of research focused on
developing and expanding theory in the area of sustainability as
Sebastian Brockhaus, Institute of Business Logistics and General Management, Hamburg University of Technology, Schwarzenbergstrae 95,
21073 Hamburg, Germany; E-mail: sebastian.brockhaus@tuhh.de
the term was rst dened by the Brundtland Commission as

meeting the needs of the present without compromising the
ability of future generations to meet their own needs (WCED
1987, 8). This perspective toward sustainability is still prevalent
in academia, industry, and public media even though alterations
(e.g., Solow 1993) and new denitions (e.g., Ehrenfeld 2008)
have emerged (Laws et al. 2004). For this study, the term sustainability describes all activities aimed at improving the social
and ecological performance of a company while also retaining
the nancial bottom line (Carter and Rogers 2008; Baumgartner
and Ebner 2010). This view toward sustainability is based on the
concept of the triple bottom line (TBL), which includes economic, social, and ecological perspectives (Elkington 1998).
There have been several attempts to translate the concept of
sustainability into business strategy, often referred to as corporate
sustainability (Rob!ert et al. 2002; Baumgartner and Ebner 2010).
However, implementation in practice still lacks a comprehensive
structure and supply chain perspective (Baumgartner and Ebner
2010; Lubin and Esty 2010; Connelly et al. 2011b). This lack of
structure is a central reason why even sincere attempts to implement sustainability often result in supercial solutions that deliver insignicantly improved ecological performance, sometimes
referred to as greenwashing (Laufer 2003; Ramus and Montiel
2005). Although greenwashing implies intentionally deceiving
consumers about the ecological performance of a product by
making it appear greener than it actually is, one might extend
this perspective to a sustainability initiative that overstates positive results due to a lack of true supply chain integration and
clear structure for ensuring cross-rm alignmentdespite a
rms good intentions.
Therefore, the underlying research question of this study is to
better understand how companies involve other members of their
supply chain into their sustainability efforts? Although existing
work and theories provide insights into the implementation within
168
the four walls of an individual company and the formation of relationships in a supply chain, only a limited amount of research has
focused on the interplay between companies as it relates specically to sustainability efforts.
In the next section, the extant literature is presented and then
offered as motivation for addressing the issue of how to implement sustainability efforts from a supply chain perspective. Following this, the methodological process used in this research is
described. Next, the ndings of the analysis are presented,
accompanied by relevant excerpts from the qualitative data,
which reect emerging concepts. This section establishes a typology for implementing sustainability initiatives across ones supply chain and makes propositions for further inquiry. This is
followed by a presentation of the theoretical and managerial
implications of the ndings from the study, along with limitations and future research opportunities. Finally, conclusions are
drawn.
LITERATURE REVIEW
While the concept of sustainability has been around for decades,
a clearer understanding of the topic has only emerged in the past
20 years (Haugh and Talwar 2010). As sustainability has been
discussed in several publications in recent years, the point of this
research was to focus on the implementation of the concept
across the network of companies that represent a supply chain
and expand existing theory surrounding this specic issue as theoretical gaps can be identied in this context (Carter and Rogers
2008).
Green supply chain management
There are several streams of literature that cover the role of sustainability in supply chain management (SCM). One of the major
areas is the eld generally termed green SCM (GSCM). As the
term suggests, the focus here is on the environmental aspects of
supply chains. The literature reviews by Srivastava (2007) and
Abukhader and Jonson (2004) provide a good overview of this
stream of research. Both articles point out that GSCM is mainly
derived from a reverse logistics angle, but also has inputs from
concepts focusing on overall process efciency. Reverse logistics
describes the upstream ow of resources in combination with a
reduction in materials to make the transport more efcient (Carter and Ellram 1998). Reverse logistics activities play an important role with respect to the environmental impact of supply
chains and have received amplied attention in the literature. For
a current review of work in this area, see Chan et al. (2010).
Srivastava (2007) examines the synergy of the ecological and
economic aspects of SCM. This notion has been promoted by
several authors before when describing the role of green for
competitive advantage (e.g., Porter and Van der Linde 1995a,b;
Florida 1996; Rao and Holt 2005; Kersten et al. 2010; Mollenkopf et al. 2010). This literature suggests that resource efciency leads to a reduction in operating costs as well as having a
positive environmental impact and thus strengthens the competitive position of the enterprise. However, as Mollenkopf et al.
(2010) and Kersten et al. (2010) among others caution, creating
genuine and long-lasting competitive advantage for the entire
S. Brockhaus et al.
supply chain also requires a stable and fair distribution of the

burdens and benets across the companies involved.
Sustainable supply chain management
The literature analysis by Seuring and M
uller (2008b) broadens
the view from GSCM to also including the social dimension and
thusdrawing on the TBL approachprovides an overview of
the sustainable SCM (SSCM) literature. SSCM is dened as the
strategic, transparent integration and achievement of an organizations social, environmental, and economic goals in the systemic
coordination of key inter-organizational business processes for
improving the long-term economic performance of the individual
company and its supply chains (Carter and Rogers 2008, 368).
Furthermore, Carter and Rogers (2008) assert SSCM that lacks a
theoretical background and suggest a framework for sustainable
supply chains that supports the concept of intercompany integration in pursuit of sustainability.
Analogous to the asserted synergy between the ecological and
economic bottom line, among SCM researchers, there is a general consensus that companies can create competitive advantage
through sustainability-focused activities (e.g., Hart 1995; Beke
and Epstein 2008; Flint and Golicic 2009; Godfrey et al. 2009;
Hart and Dowell 2011). The natural resource-based view of the
rm as introduced by Hart (1995) suggests a decisive effect on
competitive positioning for sustainability issues (Carter and Easton 2011). Although the positive impact of sustainability on the
competitive position is well documented theoretically and anecdotally for individual companies, current literature lacks insights
into how the notion of sustainability can be implementedespecially with regard to intercompany initiatives (Wolf 2011).
To shed light on this aspect, a further clarication of the
understanding of sustainability and SSCM is needed. As stated
previously, the TBL is the main theoretical underpinning for sustainability in this study. The TBL concept was further adapted
by Carter and Rogers (2008), as part of their framework for
SSCM. The notion of interorganizationality and the fact that
even though all three bottom lines are mentioned, ultimately
long-term economic performance is the rms goal, are the main
Figure 1: Illustration of sustainable supply chain management.
Sustainability Efforts Across Supply Chains
ideas inuencing this paper. As illustrated in Figure 1, SSCM

encompasses the full TBL approach with respect to supply chain
operations and strategy as dened by Carter and Rogers (2008),
whereas GSCM incorporates only the environmental and economic issues and is thus only an aspect of SSCM.
To implement SSCM, sustainability initiatives should be integrated across selected key members of a supply chain. Several
contributions in the literature provide insights into this notion:
Rao and Holt (2005) arguedrawing on empirical datathat
purchasing as well as operations and distribution activities have
to be redesigned with respect to sustainability to create genuine
competitive advantage for the supply chain. As purchasing and
distribution directly involve suppliers, logistic service providers
(LSPs), and customers, supply chain integration in the pursuit of
sustainability is an imperative. Similarly, Handeld et al. (2005)
assert that sustainability initiatives need to take a strategic supply
chain-oriented approach to engrain sustainability in the business
strategy of all supply chain members. Darnall et al. (2008) support this notion and show that supply chain integration can be
facilitated by the adoption of an environmental management system (EMS). They argue that successful internal implementation
of a sustainability effort is a prerequisite for reaching out into
the supply chain. While an EMS is only directly relevant for
environmental sustainability, initiatives can be rolled outonce
in placeto include social issues.
In addition, the literature suggests the need for enhanced cooperation for sustainability in the supply chain (Seuring and M
uller
2008a; Hopkins 2009; Pagell et al. 2010; Wolf and Seuring
2010; Seuring 2011), yet most work dealing with sustainability
strategies focuses on collaboration only in the economic dimension of sustainability (e.g., Baumgartner and Ebner 2010) and
neglects possible benets of collaboration on the social and environmental aspects. The majority of reviewed publications conclude that the state of SSCM implementation in practice can still
be considered low. Although many companies pursue isolated,
internal sustainability initiatives, only few programs extend across
companies in a structured way. Albino et al. (2009) found SSCM
to be the least adopted sustainability strategy in a sample of companies listed in the Dow Jones Sustainability World Index
(DJSWI). This result is even more meaningful as companies in
the DJSWI are assumed to be sustainability leaders and thus
should be considered state of the art in sustainability implementation. Furthermore, Albino et al. (2009) nd that internally focused
energy efciency initiatives are the primary focus for companies
in their sample. Consequently, their results provide additional
support for the notion that even among companies with an independently established strong sustainability focus, SSCM practices
are not commonly implemented across companies. Although a
practical lack of SSCM integration is therefore well documented
empirically, an understanding of this lack of implementation and
insights into how to change this situation remain elusive.
Concerning the role of certication for SSCM, Rondinelli and
Vastag (2000) point out that the implementation of certication
from the ISO 14000 family alone does not guarantee sound sustainability performance. Bansal and Hunter (2003) empirically
show that ISO 14000 certication will be more likely pursued by
companies who are already concerned about sustainability than
by those that are heavy polluters. Although certication is therefore a good indicator for advanced sustainability practices, ISO
169
14000 is ill-equipped to foster diffusion of the sustainability concept across companies. Potoski and Prakash (2005) demonstrate
that ISO 14000 lends itself well to a reduction in the necessary
effort for compliance with environmental and social regulation,
but is not of much benet to implementing sustainability outside
of compliance issues, thus falling short of holistic SSCM implementation.
Connelly et al. (2011b) argue that the theoretical foundations
for sustainability in businesses are comprised of several theories.
Similarly, Carter and Easton (2011) explicitly recommend the
use of multiple theories when engaging in research around sustainability to improve the depth of the analysis. In a recent piece,
Seuring (2011) argues that SSCM theory changes the application
of general SCM theory as certain criteria and assumptions (e.g.,
concerning sourcing decisions) are altered by expanding the view
from the single to the TBL. Thus, current management theories
will augment this studys data in support of deriving a typology
for SSCM implementation. A selection of theories suggested by
Carter and Rogers (2008), Connelly et al. (2011b), and Carter
and Easton (2011) with high relevance for SSCM is presented in
Table 1. The selection of theoretical lenses displayed in Table 1
will be applied in the description of this studys ndings to
derive theoretically sound implications. The ndings are mirrored
with theory to gain further insights into the relevance of the ndings as well as to provide suggested advancements of the theory
based on the analysis.
METHODOLOGY
As established through the literature review, the theory around
implementing SSCM is still abstract and broad in nature (Faber
et al. 2005). As argued by Lubin and Esty (2010), this results in
implementation of sustainability efforts that are characterized by
a lack of structure. Thus, consistent with the suggestions of
Fawcett and Waller (2011), this study was conducted to seek
clarity around sustainability implementation in companies and
supply chains rather than conrm preconceived ideas. Starting
from the empirical data, a theoretical framework is derived and
then mirrored with existing theories and literature. A qualitative
research design (Easterby-Smith et al. 2002; Frankel et al. 2005)
was deemed appropriate given the goals of the study. In particular, a grounded theory (GT) approach is taken, based on the fact
that it is designed to explore complex phenomena in real-life situations (Glaser and Strauss 1967). As the implementation of the
theoretical concept of sustainability across supply chains is being
investigated and the authors have a strong desire to conduct
research of high managerial relevance, GT suits the topic in
question (Glaser 1999; Mello and Flint 2009).
GT was established by Glaser and Strauss (1967) and further
rened by many authors, for example Glaser (1978), Goulding
(1999, 2000, 2002), Corbin and Strauss (1990, 2008) and Charmaz
(2006). Following the suggestions of Pratt (2008, 2009), an explanation of how sampling, data collection, and analysis were conducted and how research validity as well as ties to existing theory
was ensured is provided. Further guidance on how to employ GT
for business logistics and economics research beyond the scope of
this section can be found in Mello and Flint (2009), Maital et al.
(2008), Flint et al. (2005), Wilson (2002) and Finch (2002).
170
S. Brockhaus et al.
Table 1: Theoretical lenses for this paper

Theory
Role with respect to sustainable supply chain management (SSCM)
Stakeholder
theory
The fundamental concept of stakeholder theory is to extend the view

of a rms constituents beyond the direct representatives and the
shareholders. Primary stakeholders are actors with direct inuence on
the company (e.g., customers, suppliers) while secondary stakeholders
can affect the company through inuence on the primary stakeholders
(e.g., nongovernmental organizations). All supply chain (SC)
partners are thus stakeholders of
the focal company.
Agle et al. (2008); Garvare and

Johansson (2010)
Resource
dependence
theory
Companies decisions depend not only on rationality but also on

power. Furthermore, companies attempt to reduce resource
constraints, namely from single suppliers for a resourceeither by
diversication or by taking control of the resource themselves. As
dependency increases, rms should attempt to also increase control
and integration to ensure sustainability of the resource.
Casciaro and Piskorski (2005); Carter

and Rogers (2008); Davis and Cobb
(2009); Hillman et al. (2009); Connelly
et al. (2011b)
Transaction
cost
economics
Transaction costs (TCs) incur for monitoring the sustainability

performance of SC members. TCs are perceived to be a major barrier
for implementation of SSCM.
(Carter and Rogers (2008); Connelly

et al. (2011b)
Signaling
theory
Communicating SSCM activities is often costly. Sustainability

marketing is threatened by greenwashing. SC-integration of
sustainability efforts is crucial to sending a uniform signal as a SC.
(Connelly et al. (2011a,b)
Sampling and data collection

Over the span of 15 months, in-depth semistructured interviews
were conducted with 28 companies in the United States and
Europe. As some interviews involved more than one company
representative at a time, a total of 36 people with varying backgrounds were interviewed. An interview guideline was used to
initiate the discussions (Patton 2002); however, care was taken to
always react to themes and topics as they emerged. The interviews were carried out in person whenever possible and ran for
45 min on average. All interviews were recorded and then
transcribed. The transcriptions were the basis for the analysis. As
the authors performed the transcription, accuracy and correct use
of terminology were secured.
Theoretical sampling (Corbin and Strauss 1990; Goulding
2000; Charmaz 2006; Breckenridge and Jones 2009) was
employed. Theoretical sampling bases the selection of participants on the prospect of adding new approaches and inputs to
the study as well as saturating categories, thus driving sampling
by theory as it emerges (Glaser 1978; Goulding 2000). The focus
is on gathering rich data, not achieving statistical validity (Barbour 2001; Charmaz 2006). Sampling, data collection, and data
analysis are carried out simultaneously and the activities are
interrelated (Corbin and Strauss 1990; Glaser 2002; Suddaby
2006). For this study, sampling decisions were based on the goal
of providing a diverse picture of different perspectives and
respondents. The interviewed companies therefore represented a
cross-section of industries. The interview participants also came
from diverse functional positions, such as operations, logistics,
sustainability, and corporate social responsibility (see Table 2).
Sources
An initial sample consisting of ve companies provided a

sound starting point for validating the design of the interview
guideline and provided a survey of the topic (Charmaz 2006).
After these initial interviews, the guideline was adapted to further
specify the topic in question and include emerging categories.
The guideline was again modied after additional interviews
were completed as themes began to be distinguished more
clearly. A nal modication to the guideline was made after the
15th interview (the lead author will provide the different versions
of the interview guideline upon request). Additional theoretical
sampling was conducted after each of the changes.
In addition to the interview data, secondary information about
sustainability activities within the participating companies was
collected. Most of this information came from corporate sustainability reports and data that were made available publically on the
web. In several cases, interviewees provided internal presentations
and memos. This secondary data (data triangulation) made verication of the information from the interviews possible and added
objectivity to the data (Glaser and Strauss 1967; B
oger 2010).
Data analysis
Parallel to data collection, data analysis was conducted through
coding activities (Glaser 1978; Charmaz 2006). Multiple
researchers analyzed the data simultaneously to improve validity
and reduce the impact of potential individual biases (Corbin and
Strauss 1990).
According to Charmaz (2006), coding should be conducted in
three stages: initial coding, focused coding, and theoretical coding.
During initial coding, analysis was performed very close to the
171
Table 2: Overview of the sample

No.
Industry
Region
Respondent position/department
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Consulting
Food and Retail
Consumer Electronics
Retail
Chemicals
Food
Food
Food and Retail
Logistics
Logistics
Logistics
Retail
Logistics
Industrial Products
Paper
Apparel
Home Appliances
Medical Supplies
Food
Food
Automotive
Logistics
Food
Consulting
Food
Industrial Products
Food
Sporting Goods
Europe
Europe
Europe
Europe
Europe
Europe
Europe
U.S.
Europe
Europe
Europe
Europe
U.S.
U.S.
Europe
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
U.S.
Consultant
(1) Head of Sustainability and (2) Representative from the Logistics Department
General Manager Logistics
Head of Logistics
Supply Chain Management
Chairman of Executive Board
(1 and 2) Logistics Management, and (3) logistics service providers of interview partner
(1) Customer Service, (2) Head of Logistics, and (3) Head of Sustainability
Global Head of Green Logistics
(1) Senior Director Logistics and (2) Head Business Development
Head of Green Logistics
Division Management CSR
Head of Sustainability
Vice President of Global Sustainability
Head of Group R&D
Head of Logistics and Supply Chain Management (SCM)
(1) Head of Sustainability and (2) Logistics and Supply Chain
(1) Category Management and (2) Warehouse and Logistics
Supply Chain Management
Product Design
Product Design
(1) Human Resources and (2) Internal Consultant
Head of Logistics and SCM
Consultant
(1) Supply Chain Management and (2) Product Design and Packaging
Logistics and Supply Chain
Corporate Social Responsibility
Operations and Logistics
data and the interview transcriptions were approached without

direct consideration of existing theory (Corbin and Strauss 1990;
Charmaz 2006). The data was broken down to make it more
accessible for constant comparisons (Glaser and Strauss 1967;
Fendt and Sachs 2008). Open coding resulted in approximately
1,800 codes. During the coding process, certain groups of codes
with close ties emerged and consequently categories were formed.
During the focused coding phase, all codes were reviewed and
further generalized (Charmaz 2006). The most frequently used
codes were examined for their adequacy and renamed if necessary to include higher level concepts (e.g., when differentiating
approaches by companies how sustainability programs were
introduced into their supply chain, push and pull approaches
were termed with the higher level concept initiation). This
activity was not carried out in a linear fashion, but instead went
back and forth to the data as more abstract concepts emerged.
The nal coding phasetheoretical coding (Charmaz 2006)
aims to reassemble the data fractioned in the initial coding process and thus foster the deduction of general themes. In this
phase, the data were regrouped to create the proposed typology
for SSCM implementation. The analysis provided an ability to
assign more generic categories and reevaluate the typology
repeatedly to derive strong connections between the concepts
established (Corbin and Strauss 1990).
Saturation and sample size

Data collection was concluded when category saturation was
reached. The main indicator for saturation is the lack of new
aspects being revealed through additional data collection (Goulding 2002; Patton 2002; Charmaz 2006; Corbin and Strauss
2008) in combination with constant comparison not indicating the
existence of new properties within the categories (Holton 2010).
As data analysis revealed that the main categories formed a clear
picture of companies attempts to implement SSCM and that
these emerging categories were supported by study participants, it
was concluded that saturation had been reached after interviews
with 28 companies. Although the number of interviews is not the
key indicator of saturation, it should be noted that this amount
exceeds the suggested number of eight interviews by McCracken
(1988) for homogeneous samples and 1220 interviewees for
heterogeneous samples (Carter and Jennings 2002).
Research validity and ties to existing theory
To ensure high validity, the integrity of the research process was
veried employing criteria for qualitative research developed by
Mayring (1990). Measures taken to satisfy the criteria are summarized in Table 3.
172
S. Brockhaus et al.
Table 3: Actions taken to assure research validity

Criteria
Measures taken by research team
Documentation
Detailed documentation of data analysis and rigorous reevaluation of codes with multiple
researchers.
Use of software to structure and document the analysis.
Using conclusive arguments to

validate interpretations
All interpretation of the data is documented and identied as such.

Reference to quotations by participants when viable.
Methodological rigor and

systematic approach
Employment of different stages of coding with reevaluation of categories.

Constant comparison of codes with data.
Collecting data from real-life

situations
Conducting interviews in person where possible.

Semistructured interviews ensured openness to new aspects versus inexible questionnaires.
Evaluation of results with

participants
Concepts that emerged throughout the interviews were discussed with following participants.
Triangulation
Data triangulation with secondary data like sustainability reports.

Researcher triangulation.
Table 4: Measures taken to ensure high quality of theory development

Criteria
Credibility
Results must be adequate
representations of the data
Theory directly grounded in the data

Interview and research process of 15 months
allowed for detailed data analysis at every stage of the process
Simultaneous analysis and data collection allowed for feedback and cross-checks
Transferability
Applicability of results to
larger population
Theoretical sampling
Only reoccurring themes were transferred into theory
Dependability
Stability and consistency
of results regardless of time and place
The collective experience of all participants was tapped into for the study, providing
a large body of know-how
International nature of the study reduces strong regional
impact
International research team reduces potential regional researcher bias
Long data collection process ensures avoidance of ad-hoc conclusions
Conrmability
Results are grounded in
actual data versus driven by
researcher bias
Researcher triangulation
Feedback of results with participants
Integrity
Results are inuenced by
reality and not intentionally misguided
by participants
Anonymity was guaranteed to all participants

Interviews were conducted in an nonthreatening manner
Data triangulation
Continued.
173
Criteria
Fit
The results are signicant and
meaningful for the topic under
investigation
Interviews were conducted in an open manner, allowing for participants to raise

issues of importance to them
All theory is directly taken from data
Understanding
The respondents understand the
conclusions derived by research team
A summary of the interviews was given to all participants as well as colleagues and
practitioners for review
Working results were presented on conferences (POMS
2010) and workshops (workshop about sustainable products at Indiana University,
14th15th October 2010) and feedback was included
Generality
The ndings cover the subject
under investigation in a holistic
fashion and include multiple
dimensions of the topic
Semistructured interviews were open and of sufcient depth to allow for multiple
aspects of the issue to be discussed
Interview guideline was adapted to include further aspects as pointed out by the
participants
Control
Participants have an inuence
on developed theory
Executives of multiple different functional backgrounds were interviewed about

their take and input on the topic
Focus on possible inuence of participants companies and their role in the supply chain
Figure 2: Sample-companies positions in the supply chain.
Research validity was evaluated following the view of Glaser

and Strauss (1967) that the quality of theory developed using this
approach is highly dependent on its generation process. The
approach was veried for GT generation following the criteria of
Glaser (1978, 2002) as rened and expanded by Flint et al.
(2002). Efforts to ensure high quality of theory development and
methodological rigor are summarized in Table 4.
FINDINGS
Companies interviewed for the study represent the different roles of
a generic supply chain: suppliers, manufacturers, retailers, and
LSPs. The generic supply chain employed here is an adapted version
of the extended/ultimate supply chain model established by Mentzer

et al. (2001). These terms will be employed in the remainder of this
paper to identify the position of a company in the supply chain. As
companies from different continents and industries were interviewed, the sample provides coverage of the different roles and
views in a supply chain (see Figure 2).
With all interviewed companies, their individual understanding
of sustainability was discussed at the beginning of the interview.
Thus, use of common terminology during the interviews could be
ensured. The understanding of the concept of sustainability in all
interviewed companies resembled the TBL approach. The concept
of viewing sustainability from a social, environmental, and economic perspective resonated well with the participants and was
found to be an accessible approach as has also been suggested by
Carter and Rogers (2008). All participants stressed that a potential
positive impact on the economic bottom line was an imperative for
pursuing an initiative as companies will: do all the things that
make sense for the planet that have an economic payback. (Interview # 23, Food, U.S.) This attitude directly supports the economic
impact paradigm put forward by the employed SSCM denition
established by Carter and Rogers (2008) and therefore further supports the adequacy of the current denition.
In accordance with the GSCM and SSCM literature summarized
in the literature review section, the participants claimed that they
felt that pursuing sustainability would help their companies build a
competitive advantage in the future. Therefore, all participants had
already started engaging in sustainability initiatives within the
realms of their organizations. However, a lack of cooperation with
other members of ones supply chain with respect to sustainability
was identied in the current sample, as also suggested by the
research summarized in the review of the extant literature (e.g.,
174
S. Brockhaus et al.
Figure 3: Typology of the supply chain approach toward sustainability.
Sabath and Fontanella 2002; Barratt 2004). Baird and Rowen

(2010) attribute the lack of reaching out into the supply chain to
the fact that companies in their sample viewed outsourced processes and logistics to be beyond their direct control and they preferred to focus on their own operations. In accordance with this,
the participating companies of this study tended to have a strong
internal focus and showed only limited, sporadic activity aimed at
extending sustainability initiatives across their supply chain.
If companies did, in fact, extend their sustainability efforts into
their supply chain, the focus with respect to sustainability can be
differentiated into what can be termed mandated or what can
be termed collaborative. To achieve more clarity around this
apparent disconnect between perceived importance and actual
implementation, a typology of SSCM implementation is developed. In accordance with Carper and Snizek (1980), Marradi
(1990), and Rich (1992), the term typology is employed,
because this is a multidimensional classication scheme of the
implementation approach. The proposed typology also provides
direction for further research activities and the associated propositions are detailed as they emerge. An overview of the typology
is presented in Figure 3 and will be further explained in the following paragraphs. In support of the propositions that emerge
around the typology, statements from the participants are incorporated into the text. In addition, further proof-quotes for each of
the propositions are provided.
Mandated implementation of sustainability in the supply
chain
The data strongly support the view that if companies reach
beyond their own borders, they are currently doing so in a mandated fashion. Mandated sustainability initiatives are usually initiated by the retailers (buying rm) in the supply chain and then
extended to the upstream members (selling rm), as this
participant reports: normally we approach the supplier and say
hey you know for us it is a very important topic and by the way,
reducing your energy input could even save your money (). So
it is mostly a matter of us persuading and convincing them to
tackle some of the points that we show them (Interview # 12,
Retail, Europe). Organized in the form of dyads, this cooperation
only involves companies in subsequent tiers in the supply chain.
It was the perception of the participants in the study that the
initiatives were implemented in this way across the supply chain
because only the stronger and more powerful members of the
chain could initiate such initiatives as this participant explains:
our ability to push an agenda on sustainability to our retailers is
relatively small. That is the same environment that exists with our
suppliers. So it is a pull process. And it starts with leadership
and the folks who have the leverage to get things done. Clearly
speaking, most of our suppliers do not have that leverage (Interview # 14, Industrial Products, U.S.). Based on the current statements (see also Table 5 at the end of this section) and the
aggregated data analysis, the following proposition emerges:
Proposition 1
Sustainability efforts are currently implemented in a mandated fashion as a pull process through the supply chain
and initiated by the stronger members of the chain.
Mandated sustainability initiatives are usually implemented on
a formal here is what we need you to do basis. A good
example of this is the use of codes of conduct a retailer requires
their manufacturer, supplier, or LSP to sign to establish a business relationship as this participant notes: usually the customers
have a policy we have to sign or we ll out a questionnaire.
There is not really a discussion (Interview # 9, Logistics, Europe). This form of implementation can be labeled mandated
because it does not involve much two-way conversation or
sharing of best practice or experience as the following participant
175
Table 5: Proof-quotes for the emerging propositions

Further support
for Proposition 1
I would say, at this point it is on our end. We have a lot of reaching out to suppliers to do () these are all
things that we have initiated. (Interview # 18, Medical Supplies, U.S.)
From a supplier perspective, they have never come to us. It is us coming to them. Weve had no push from
the supplier perspective. So its this trickle-down effect, we are a big supplier to some retailers, who have put
us in their high-risk, highly monitored kind of group and we have replicated that process with our supply
base. But generally speaking, our suppliers are not pushing this topic at all. (Interview # 14, Industrial
Products, U.S.)
The bigger companies can pretty much get suppliers to create whatever they want or at least consider it.
With us, if it is not something that is emerging or readily available they are not creating it. Only in very
few cases, folks are going to create something special for us because of our [small] size. (Interview # 23,
Food, U.S.)
Further support
for Proposition 2
Our suppliers are always involved and quite frankly, we are very tough on our suppliers. We do supplier
challenges. You go out to current suppliers and potentially new suppliers and tell them what you are
looking for. () We denitely take advantage of the resourcing, insights and capabilities that our supplier
have. (Interview # 20, Food, U.S.)
We havent had a lot of success to be honest with you. The suppliers will call and promise the world and
when you sit down and dig down, in every case weve had so far, they are not really much further ahead
than the folks we are dealing with now. There is a lot of greenwashing going on and a lot of
self-promoting. (Interview # 23, Food, U.S.).
Further support
for Proposition 3
I was invited to a sustainability workshop at a company recently and they just kept talking about prices
for the logistics lanes in their last tender. Then somebody got up and asked if this was about sustainability
or about prices and they admitted that is was just pricing negotiations but they knew wed show up for
sustainability talks (Interview # 7, logistics service providers of interview partner, Europe).
Something that deeply impressed me, () there were customers who had been evaluating the company
and conducted a benchmark and we were in the top segment environmentallyand then nally they give
you no business and make their contracts with the cheapest company. (Interview # 10, Logistics, Europe)
Further support
for Proposition 4
We are moving to this notion of shared benets and shared responsibility and that is really the key to a
good relationship with any outside vendor. () As far as hiding the benets of those things in
partnerships, that doesnt work. So we are really trying to roll that out across the company, this notion of
shared benets. (Interview # 8, Food and Retail, U.S.)
In terms of collaboration, what I am seeing this far is that a lot of companies want to get together and
not just discuss: what is our sustainability strategy? But they want to look at what organizations are
doing, independently or collectively to be more sustainable and seek opportunities to collaborate.
I think one other plus side from just leaning your operation () sustainability in a macro view really is
about collaboration on one level in order to agree upon the processes, procedures and technologies that
are used to move products around the globe. (Interview # 13, Logistics, U.S.)
I think what I would do () is horizontal integration. Because I think for example trucks in Europe are
on average only 2030% full of cargo. So a huge opportunity lies in collaborating in the supply chain.
But obviously there are severe obstacles; companies do not want to share data or any information about
their supply chain. So I think there is a lot of work to be done in this area. (Interview # 9, Logistics, Europe)
if I sat at my desk alone, I would not have these ideas, but if you go out to talk with carriers and service
providers, industry at conferences or whatever, talk to your own people; the network in Europe is big enough;
then you get new ideas and some of them are really great. (Interview # 3, Consumer Electronics, Europe)
indicates: we were in a meeting with a retailer 2 years ago. They

said: You WILL [emphasis added] provide us with a sustainable
product. We wont forget. It wasnt a question; it wasnt a
request; it was a statement (Interview # 17, Home Appliances,
U.S.). Communication around sustainability in a mandated initiative is often characterized by strict instructions that are made by
the dominant party. Commonly, the communication is focused
on economic aspects rather than truly broaching sustainability
topics as this interviewee illustrates: my feeling is that they are
approaching us but not on a constructive basis that they honestly

want to make suggestions or know what they are talking about
or want to discuss. They are basically approaching us with a
slim commercial line () and they just want to show off that
they have less greenhouse emissions or whatever. So that is not
what I feel is some kind of working together, it is more just a
simple commercial pressure that is put on somebody and on the
company (Interview # 10, Logistics, Europe). Based on these
ndings, the following proposition is established:
176
Proposition 2
Mandated sustainability implementations are characterized
by a lack of communication and collaborative behavior.
S. Brockhaus et al.
their warehouses: the retailer we worked with wanted the cost reductions passed on, that is the underlying thing (Interview # 27, Food,
U.S.). These ndings lead to the following research proposition:
Proposition 3
The powerful members in the supply chain (typically retailers

in this study) generally strive to capitalize on short- to mediumterm cost reductions or marketing opportunities. Rather than
developing a long-term competitive advantage for the supply
chain as a whole, in case of mandated implementation, the low
hanging fruit of working with the manufacturers is harvested by
the retailer. The main motivation as a manufacturer or supplier to
engage in this form of SSCM implementation is generally not to
improve their own sustainability performance, but to comply with
retail requirements. Consequently, these efforts can often be characterized by a lack of buy-in by the manufacturer, supplier, or
LSP forced to implement the initiative because there is no or limited internal benet on their side. The cause of this situation lies
in the fact that a major characterization of mandated initiatives is
the disproportionate distribution of the incurring benets, risks,
and investments across the companies involved. Specically, evidence emerged in the data that companies with major bargaining
power in the supply chain use this inuence to benet disproportionately from sustainability activity because: if you are the power
player in the supply chain, you just force all the companies
around you to be green and take advantage. That is more common for larger retailers and larger players in the supply chain.
So they push the cost onto their suppliers and the actual green
improvements are from the suppliers but it is not necessarily
more green within the four walls of the larger player in the supply chain (Interview # 24, Consulting, U.S.). As mentioned in the
literature review, work by Lee (2009), Mollenkopf et al. (2010),
and Kersten et al. (2010) provide support for this nding.
Although the retailers in strong bargaining positions have the
power to force their manufacturers and suppliers to implement
certain sustainability measures, they will also demand potential
cost-savings be passed on to them entirely and directly. Several
suppliers and manufacturers across different industries indicated
that they had found their large customers to use sustainability
discussions as code word for pricing negotiations, arguing the
suppliers sustainability initiatives would lower operating costs
due to incurring efciency gains. In certain cases, suppliers might
thus even be hesitant to implement or communicate sustainability
initiatives because they fear consequential price reduction
demands by their customers. Plambeck (2007) reports similar
problems in her analysis of Wal-Marts sustainability program.
Especially for generic, easily exchangeable services like basic
transportation or warehousing activities as well as low-tech commodity suppliers and companies that are very much dependent on a
customer that does not really depend on them, this fear was ever
present when talking about sustainability-induced efciency efforts.
Several examples of this perspective emerged in the logistics sector
where participants reported that they had become hesitant to fully
disclose their sustainability efforts to their customers because they
feared price reductions (see quote from interview # 7 in the following section). However, even companies supplying more specic
products to retail customers suddenly found themselves facing pricing discussions with their retail partners after successfully implementing a program that saved energy and emissions, for example, in
Sustainability efforts characterized by uneven distribution

of incurring benets and risks and implemented in a mandated fashion suffer from a lack of buy-in by the dominated party.
A majority of the interviewees agreed that sustainability cannot yet be considered a standardized differentiation criterion for
supplier selection processes even though its importance is widely
recognized. Literature supports the importance as well as the lack
of practical implementation (Handeld et al. 2002; Baumgartner
and Ebner 2010; Wolf and Seuring 2010). A simple explanation
would be that companies have just not adapted their institutionalized supplier selection process criteria yet and therefore currently
fail to adequately consider sustainability.
Furthermore, many participants mentioned that they had trouble
quantifying sustainability and were lacking the tools to assess it
as part of their supplier selection process. Support for this notion
can be found in the literature (e.g., Handeld et al. 2002; Stani#skis and Arba#ciauskas 2009; Wolf and Seuring 2010). Another
possible explanation of this nding is provided by transaction
cost economics (TCE). Companies perceive monitoring costs for
a sustainability assessment to be high and thus often refrain from
making sustainability issues a selection criterion. As introduced in
the literature review, ISO 14000 certication provides a possible
alternative to individual sustainability monitoring. Yet, as mentioned previously, ISO 14000 does not fully cover SSCM
implementation, certication can only be a positive indicator while
companies still have to make costly individual assessments. The
role of TCE will be further explored in the implications section.
Collaborative supply chain sustainability initiatives
Collaborative sustainability efforts in this paper are dened as a
higher level concept. The concept is derived from the statements
and views of the participants of the study and represents their
ideal vision of sustainability implementation in the supply chain.
This vision involves at least two companies working jointly for an
extended period of time on sustainability initiatives and collaboratively improving their performance on the TBL criteria. Fully
implemented instances of this type of approach did not surface
during the interviews; however, the participants indicated that they
had a desire to get further engaged in these efforts. However, they
found this collaboration to be challenging because: the relationship is critical. To have a truly sustainable product, you have to
go up and down the supply chain in both directions. If it is going
to be forced on us, the result isnt going to be as good as if it is
partnership, working towards the same vision (Interview # 17,
Home Appliances, U.S.). As collaboration of this kind requires a
relationship with a high degree of trust and a long-term perspective, it is most likely to evolve from preexisting strong relationships that are expanding into the area of sustainability.
The main motivation for companies to engage in collaborative sustainability efforts is the opportunity to gain long-term competitive
advantages for their whole supply chain. While participants found it

difcult to pinpoint the exact source of the expected competitive
advantage, there was consensus among all interviewees that collaborating around sustainability would be benecial as opposed to more
mandated forms of implementation. Existing literature (Steger 1996;
Sinding 2000; Sharfman et al. 2009; Seuring 2011) supports the
view that collaborative initiatives are preferable to a mandated
approach as they are more likely to produce satisfactory results for all
parties involved. The following statement provides support for this
viewpoint: Customers approach us very differently. Some just write a
letter saying: This is what we want, see how you can make it
happen. And because we know you will be saving fuel by being more
efcient, we will pay you 5% less from now on. So they are all about
the money. Others will try to work with you and nd solutions and
will share benets. That makes things a lot easier. (Interview # 7,
logistics service providers of interview partner, Europe). Based on
these ndings, it is proposed that:
Proposition 4
Sustainability initiatives pursued in a collaborative fashion
are more likely to be accepted by supply chain members
than initiatives based on mandated implementation.
IMPLICATIONS, LIMITATIONS, AND FURTHER

RESEARCH OPPORTUNITIES
Theoretical implications
As pointed out by Lee et al. (1999) and Pratt (2009), qualitative
research and GT in particular is well suited to augment and elaborate existing theory. As stated in the literature review and methodology sections, there is no single sustainability theory. In
Table 1, an overview of a selection of management theories with
respect to SSCM implementation is provided. In this section,
these theories will be connected to the results of this study. The
main research question was to identify how companies involve
other members of their supply chain in their sustainability efforts.
As the answer to that question, the proposed typology of sustainable supply chain implementation was developed.
The basis of the theoretical analysis is the application of stakeholder theory (SHT) to SSCM because SHT denes the relevant
actors and recipients for any sustainability activity (Carter and
Easton 2011). SHT explicitly points out that all members of a
supply chain have to be considered stakeholders of a focal company. The notion of stakeholders is therefore part of general
SCM denitions (e.g., Lambert et al. 2008) and is at the core of
the SSCM denition established by Carter and Rogers (2008).
The ndings of this study support the importance of SHT, as the
underlying tenets of the theory were referenced by the participants. Consequently, the data shows that SHT has a wide acceptance among practitioners involved in sustainability issues. On
one hand, companies felt a strong push by stakeholders like customers, the government, and nongovernmental organizations to
get engaged in sustainability, therefore the expected connection
of SHT and sustainability is supported by the data. On the other
hand, the strong internal focus held by the companies in the
177
sample does not t SHT because companies either do not fully

identify other members of their supply chain as important stakeholders with respect to their sustainability programs or at least
do not act on this belief if they do. With respect to the statements of the participants supporting a more collaborative
approach, the data suggest that companies acknowledge the need
to include other members of their supply chain in their sustainability efforts, thus supporting the later conclusion.
An examination of the data suggests that companies currently
have a tendency to pursue a mandated implementation approach
for sustainability efforts. They use their power over other
members of their supply chain to force them to implement sustainability-related measures. In addition, there is a tendency for
the buying rm to skim most of the benets even though many
participants suggested that they would consider collaborative
approaches to be more successful in the long run. Resource
dependence theory can help explain this type of behavior as it
predicts rms to use organizational power to reduce
dependencies on other supply chain members by loosening
relationships or diversifying (Min and Galle 2001; Connelly
et al. 2011b).
The current data indicate, however, that the observed behavior
can be explained by a simple lack of sufcient SSCM implementation and companies were generally interested in moving in a
more collaborative direction and were also slowly starting to do
so. This notion is supported by work by Pagell et al. (2010) who
nd companies that had already successfully implemented SSCM
to work much more collaboratively than a supplier selection
concept following Kraljic (1983) would suggest. They nd companies in their sample to refrain from leveraging the suppliers of
commodities, even though standard supplier selection concepts
would expect them to do so. Rather, they nd a desire for longterm collaborative relationships to progress sustainability
initiatives across the supply chain. Although this behavior could
not be found in the current data, the participants repeatedly suggested that they were moving in this direction.
Based on this result, the current ndings were also analyzed
with respect to TCE. Data from this study indicate that collaborative sustainability efforts are understood to facilitate more benet
than mandated implementation approachesa view reported by
all participating companies. This nding supports the views put
forward by Seuring (2011) in his recent analysis of SSCM. Seuring (2011) further argues that SSCM implementation strongly
depends on increased supplier development and monitoring of
performance on a large variety of criteria. Furthermore, he cautions that increased monitoring can lead to rising transaction
costs, ultimately possibly even driving costs above the value of
the supply itself. If rising transaction costs for SSCM are thus
inevitable, yet companies are pressured to grow more sustainable
by their stakeholders, collaborative efforts for sustainability are
the key to leveraging a joint effort to increase performance of
the entire supply chain. Consequently, the ndings of the study
that collaborative sustainability efforts are preferable to mandated
implementation can be supported by TCE as collaboration can be
a way to reduce sustainability-related monitoring costs.
In this regard, signaling theory (ST) may also play an important role for transaction costs and SSCM implementation. ST
predicts that companies have a rationale for making costly
investments to convey a message to the recipient that is difcult
178
to imitate (Connelly et al. 2011b). As mentioned previously, ISO

14000 certication is a good example of those signaling costs
incurred to indicate commitment to the constituents. With regard
to both TCE and ST, this studys ndings can contribute the
approach of leveraging the transaction costs incurred by a sustainability effort. The data suggest that collaborative efforts can
be more effective because they generate high levels of buy-in for
all parties due to efcient incentives allowing everyone to benet. As argued in the literature, TCE and ST underline the importance of bringing down the cost of sustainability implementation
(Nidumolu et al. 2009; Connelly et al. 2011b). The current data
suggest that collaboration provides opportunities to enhance the
efciency and effectiveness of sustainability initiatives, thus
reducing the impact of the transaction costs relative to the overall
benets.
Managerial implications
This study provides several ndings with high relevance for supply
chain managers as well as practitioners in charge of sustainability
efforts. Primarily, from the data, it can be concluded that the current
level of SSCM implementation and thus the supply chain integration of sustainability initiatives can be considered insufcient. Companies should consider quickly stepping up their involvement with
other members of their supply chain in their implementation of sustainability initiatives as this will be an important opportunity to
leverage their relationships. Furthermore, the data indicated that
most companies currently waste the vast potential of involving other
supply chain members in sustainability efforts by not approaching
these outside companies in an appropriate way. The current focus
on mandated implementation does not allow for sustainability initiatives to generate as much impact as they could because there is a
misalignment of incentives. If the less powerful players in the supply chain (often the suppliers) are not allowed to benet from sustainability improvements, they will not fully endorse initiatives,
thus falling short of the potential. Power players in the supply chain
should possibly even consider enabling suppliers to contribute more
to the sustainability initiatives by helping them with the necessary
resource investments. Pagell et al. (2010) nd evidence of companies already making sustainability initiatives an important part of
their supplier development efforts and also nancing investments
that their suppliers could not have managed on their own. Although
this study did not contain any participants who had experienced
efforts in this direction, several interviewees mentioned that they
would be willing to explore the possibilities. The results of the study
should encourage practitioners to engage in collaborative efforts
around sustainability to build long-term competitive advantage for
their own company as well as their supply chain.
Limitations and future research opportunities
The selected GT approach for this analysis has provided rich data
and meaningful insights into the research question. However,
there is a potential limitation of using theoretical sampling. The
study did not ask standardized survey questions and has a limited
sample size. Thus, the results of this study may not be fully representative of the population. However, ndings of GT research can
be employed to derive research propositions and make suggestions for further work. Following the examples of Closs et al.
S. Brockhaus et al.
(2010) and Flint et al. (2005), the propositions that emerged from
the ndings serve as an impetus for follow-up research.
Opportunities also emerge for researchers to empirically analyze sustainability in the supply chain across different industries.
Given the wide focus of the article, the analysis did not focus on
looking at potential industry differences. Analysis in this direction may prove to be valuable as differences between industry
sectors and market types can be expected.
When companies extend their sustainability efforts into their
supply chain, the data indicate a mandated implementation
approach to be prevalent. There were strong indications that this
approach may lead to suboptimal results due to misaligned
incentives. The research proposition can be employed as starting
points for hypotheses examining this idea. Propositions 1 and 2
can be used for a quantitative validation of the mandated implementation of sustainability initiatives. Propositions 3 and 4 provide possibilities to analyze the current misalignment of the
incentives in the supply chain as well as develop approaches for
collaborative initiatives.
Based on the collected data and in accordance with TCE and ST,
collaborative work in sustainability is recommended as described
previously and companies are encouraged to press for a fair distribution of benets, creating winwin situations for themselves and
other members of their supply chain. This study provides initial
ideas for possible relationships between collaboration and transaction costs that should be further pursued empirically as well as
using modeling approaches. Researchers may also want to consider
engaging in research around the fundamental question, in what
ways intensied collaboration with suppliers as well as customers
can enhance the TBL performance of a focal company.
In accordance with general relationship models (e.g., Lambert
et al. 2009), companies should carefully evaluate and select their
strategically important business partners and approach them with
collaborative sustainability opportunities. In terms of potential
future research, the need for additional insights into the supply
chain dynamics with regard to sustainability emerges. Researchers can provide comprehensive models on how to structure relationships in the supply chain to address the problems of
incentive alignment. Partnership models should be expanded to
include sustainability issues and provide direction for appropriate
ways to allocate benets and risks across the supply chain.
CONCLUSIONS
Based on the ndings and the theoretical and managerial implications, it can be concluded that SSCM implementation is at an early
stage of development. Companies have yet to embrace the idea of
fully implementing sustainability into their supply chain relationships. The current dominant perspective to focus internally with
respect to sustainability cannot produce satisfactory results in terms
of TBL performance in the long term. Furthermore, when companies do extend sustainability efforts into the supply chain, they typically take a mandated implementation, which was viewed by
several companies as a suboptimal approach. Both from a theoretical point of view and a view supported by the current data, a more
collaborative supply chain implementation approach to sustainability, featuring long-term relationships, supplier development, and
fair distributions of incurring burdens and benets promises
enhanced results on all three bottom lines. This conclusion is further supported by the fact that the majority of the respondents indicated that sustainability efforts should not be considered as only a
fad or a passing phase, but as a major business trend that will continue to evolve in the years to come. Therefore, companies are
encouraged to actively seek out sustainability opportunities and be
willing to take risks associated with these efforts. Just like any business trend sustainability requires know-how that can only be
acquired through experience.
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182
SHORT BIOGRAPHIES
Sebastian Brockhaus (Diplom degree University of Hamburg) is a research associate at the Institute of Business Logistics
and General Management at the Hamburg University of Technology. His research focuses on sustainability in supply chain management and supply chain relationships.
Wolfgang Kersten (doctoral degree from the University of
Passau) is Professor for Logistics and Director of the Institute of
Business Logistics and General Management at the Hamburg
University of Technology. Prof. Kerstens research focuses on
the areas of supply chain risk and complexity management, sustainability in supply chain management, and project management.
S. Brockhaus et al.
His work appears in several anthologies and conference proceedings as well as other international outlets.
A. Michael Knemeyer (PhD University of Maryland at College Park) is an Associate Professor of Logistics at the Fisher
College of Business, The Ohio State University. His research
focuses on the areas of logistics outsourcing and supply chain
relationships. Dr. Knemeyers work has appeared in the Harvard
Business Review, California Management Review, the Journal of
Business Logistics, the International Journal of Logistics Management, Transportation Journal, Journal of Supply Chain Management, and International Journal of Physical Distribution and
Logistics Management.

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Journal of Business Logistics

A Compendium of Multi-Item Scales Utilized in Logistics Research (200110): Progress

A Multidisciplinary Approach to Supply Chain Agility: Conceptualization and

Conceptualizations of Trust: Can We Trust Them?

Environmental Development of Emerging Economy Suppliers: Antecedents and Outcomes

Where Do We Go From Here? Progressing Sustainability Implementation Efforts Across

Journal of Business Logistics, 2013, 34(2): 7784

Data Science, Predictive Analytics, and Big Data: A Revolution

Source: IBM, http://www-01.ibm.com/software/data/bigdata/

M. A. Waller and S. E. Fawcett

Figure 1: Effectiveness, domain knowledge, and breadth of analytical skill set.

We want to encourage submission of research on topics

Generally, data science is the application of quantitative and

be easier at a younger age, whereas learning the intricacies of a

Data Science & Big Data

Broad awareness of many different methods

Derivations of methods and proofs

We now propose a denition of SCM data science: SCM data

For a very interesting discussion on this topic, see Carraway

The theory of stochastic processes

the reason why we expect the number of false positives to grow

M. A. Waller and S. E. Fawcett

Table 2: Examples of research in predictive analytics

Predicting the future

Integrating quantitative and

Improving Lagrange Multiplier

Applied probability along with

Data mining preceded by logical

Gibbs posterior for variable

Methods of quickly and

Proving inventory theorems that

Table 2 examines a sample of disciplines related to predictive

Use of polyhedral functions

These are some examples of the differences in emphasis between

Data Science & Big Data

Table 3: Examples of causes of big data

More detail around the sale,

From monthly and weekly

Direct sales, sales of distributors,

From click through

Perpetual inventory at more locations,

From monthly updates

Face proling data for shopper

name. The idea is becoming so common that a name helps with

Frequent updates for new

in large numbers. Table 3 provides examples of some of the

M. A. Waller and S. E. Fawcett

Table 4: Examples of potential applications of big data in logistics

Real time capacity

Linking local trafc

Table 5: Examples of research questions

Location and time

How can sales data

How can more current

How can more granular sales "

How can sensor data

How can location and time-stamp

Customer and supplier

How can customer sentiment

ure 3C shows a graph of searches6 for Big Data, with Supply

Data Science & Big Data

Figure 3: Google searches for growth of interest in DPB professionals.

Panel B: Google Searches for Predic ve Analy cs since 2004

Management. We do not think big data will become more